Coupons mean an interest income paid by the issuer to bondholders.
Coupon payments and bond redemptions are corporate actions: they are determined by the terms of the issue and affect the income generation and securities trading in your portfolio.
The main types of corporate actions related to coupons and redemptions are:
1. INTR - Coupon Payment (Corporate Action: Coupon).
The issuer pays interest income to bondholders.
Investors registered in the register as of the date designated by the issuer are entitled to the coupon. The payment schedule and amount are determined by the terms of the issue (e.g., semi-annually or annually).
The income may be fixed or floating (if so determined in the issue) and is automatically credited into your brokerage account.
2. REDM - Bond Redemption (Corporate Action: Redemption).
The issuer or management company returns the invested funds to investors, after which the bond ceases to be traded.
Redemption occurs on the date designated in the terms of the issue. The investor receives the par value of the bond and the final coupon (if provided).
Redemption may be scheduled or early - for example, as part of a put option or at the issuer's initiative.
3. PRED - Partial Redemption without Reduction in Par Value (Corporate Action: Partial Redemption).
The issuer returns a portion of the investment to investors, while the par value of the bond remains unchanged.
The bond continues to be traded under the same terms, without adjusting its par value.
4. PCAL - Partial Early Redemption with Par Reduction (Corporate Action: Partial Early Redemption).
The issuer redeems a portion of the bonds before maturity and simultaneously reduces the par value of the remaining securities. As a result, the total issue size is reduced, and the par value of the outstanding bonds is adjusted.
5. MCAL - Mandatory Early Redemption (Corporate Action: Early Redemption).
The issuer or its agent redeems the entire issue of securities (bonds or preferred shares) before the maturity date.
Thereafter, the issue ceases trading.
6. PDEF - Partial Redemption by Repurchase (Corporate Action: Partial Repurchase/Redemption).
The issuer repurchases a portion of the issued securities from investors before maturity.
The repurchase may be effected at the market price through the stock exchange or by offer at a pre-announced price. Only a portion of the issue is redeemed. The par value and trading conditions of the remaining securities remain unchanged.
7. BPUT - Early Redemption at the Investor's Option (Corporate Action: Early Redemption Originated by the Investor).
An investor may call a bond for early redemption if the terms of the issue so provide. The issuer redeems the bond and makes the payment under predetermined terms.
Essential Details to Know
All of the above transactions are corporate actions originated by the issuer or stipulated by the terms of the bond issue.
The Broker Report provides for the type of corporate action (dividend, coupon, redemption, split, etc.), and the payment amounts and dates are determined by the issue documentation.
Important!
In this section, the examples provided by Freedom Finance PLC (hereinafter referred to as the Company) are hypothetical, illustrative, and intended to provide a general explanation of the relevant provisions. These examples are not intended to apply to specific circumstances, do not take into account the individual circumstances and conditions of the Client, and should not be relied upon as the basis for making any investment or other decisions.
The Company assumes no liability for the accuracy, completeness, or interpretation of the information provided, or for any losses the Client may incur as a result of its use. The Company also assumes no liability for any consequences of investment decisions made by the Client based on this information. More detailed risk information is available in Annex 4 of the Brokerage Services Regulations, which is posted on the Company's official website.