I am learning about corporate bond. For example, one has a coupon rate 7% and it is bi-annual (so paid twice a year).
From the internet, the coupon payment date is Tuesday (so two days later). If I buy the bond on Monday, am I qualified to receive the coupon payment? Or it have a record date concept like a share dividend, which means I won't receive the coupon payment? I searched and seems can't see any record date information.
Many thanks
There is a "record date", but not for the same reasons as the reason for stocks. Unlike stocks where a dividend is a binary event (either you get the whole dividend or you get nothing), when you buy/sell a bond between coupon periods, you get/pay a prorated portion of the coupon. So in your example, let's say that there are 182 days in the coupon period that ends on Tuesday and you buy it on Monday. Then you must compensate the seller for 181/182 (99.5%) of the coupon. You would then get the full coupon on Tuesday, for a net effect of one day's worth of the coupon.
With a stock, you either get the full dividend or nothing, but the price of the stock is decreased by the full amount of the dividend. Because the company is paying the dividend, it's assets, and thus its stock value, is decreased by the amount of the dividend. If you sell a stock around the ex-div date, you'll either get the higher pre-dividend price and no dividend, or the lower ex-dividend price and the full dividend.
Since bonds accrue the interest over the coupon period, the sales price includes at least part of a coupon, so there's less of a dramatic jump in the price, so the "record date" is more of a cutoff to determine who gets the full coupon.
