What is a running coupon?

When we talk about the concept of a running coupon, we refer to the interest that accrues until a date on the coupon of a fixed income security that we are considering. Well, that interest accrues, it accumulates from the date of the last payment, to be able to make the next one.

Let's explain it: when we acquire a title of fixed rent We lend our money in exchange for receiving the value of the title at the end along with some interests, which will be received according to a periodicity (by semesters, quarters, annually, etc). The running coupon is the part of the interest on the bond (or any fixed income security) that accumulates day after day.

Obviously, the more time has passed since the date of the last coupon payment, the higher the accrued interest, as well as the accrued interest, so the running coupon is higher.

We must also bear in mind that, when we go to buy a bond It will be necessary to assume the interest that has accrued at the listed price (known as the ex-coupon price). The total price of the bond is the result of adding to the running coupon the ex-coupon price of said bond, this being the amount that we will have to pay for it.

The latter is very important, since many times when we acquire a bond with these characteristics we do not take into account this aspect which, in addition, increases the price we pay for the bond, which could come as a surprise to many.

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