Coupon

Full Definition

A coupon (also known as the coupon rate or interest rate) is the annual interest payment that a bond issuer agrees to pay bondholders. It is expressed as a percentage of the bond's nominal (face) value and determines the periodic cash flows the bondholder will receive.

For example, a bond with a €1,000 nominal value and a 6% coupon pays €60 per year in interest. Payments may be made annually, semi-annually, or quarterly depending on the bond terms.

Why It Matters

On Sails.to, bond offerings clearly display the coupon rate so investors can calculate expected returns. Higher coupons typically indicate higher risk or less favorable terms for the issuer. The coupon, combined with maturity and current price, determines a bond's yield.

For CrossSecurities bonds, coupons are paid to token holders regardless of whether they hold in on-chain or bankable form - distributions flow through automatically.

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