Holders of exchange-traded Australian Government bonds are generally paid regular coupon interest. This is based on the coupon rate of the bond and remains in effect for the life of the bond, even as its market price fluctuates.
Investors who hold exchange-traded Australian Government bonds at the close of business on the record date (eight calendar days prior to the interest payment date) will be entitled to the next interest payment. The settlement period between the record date and the payment date is known as the ex-interest period. Trades which settle during this period are not entitled to the next interest payment.
It is helpful to note important dates such as when Australian Government bonds go ex-interest, pay coupons and mature.
You must purchase an Australian Government bond at least two business days prior to the record date (including that day) to be eligible to receive the next coupon payment. At the beginning of trading two business days prior to the record date (including that day), the price of the bond will generally adjust downwards to reflect the fact that a purchaser of the bond is not entitled to the next coupon interest payment. This is similar to a share going ex-dividend.
