Kuponkimaksu

Kuponkimaksu is the periodic interest payment made by the issuer of a fixed-income security to the holder of a coupon-bearing instrument, most commonly a bond. The term is used in Finnish finance to denote the cash flow representing interest, as distinct from the return of principal at maturity. Coupon payments are typically scheduled at regular intervals, most commonly semiannually, though some bonds pay annually or at other frequencies.

Calculation and structure: The amount of each kuponkimaksu is calculated as the par value (nominal value) of the bond multiplied by the coupon rate, divided by the number of payments per year. For example, a bond with a par value of 1,000 euros and a 6% annual coupon that pays semiannually would deliver 30 euros every six months (since 6% of 1,000 is 60 per year, divided by two payments). The coupon is paid on predetermined coupon dates to the bondholder of record on the relevant date.

Impact and market considerations: Coupon payments are fixed for the life of the bond unless the instrument is callable or has a floating coupon. The coupon rate influences the bond’s cash flows, while the yield to maturity depends on both the coupon and the bond’s current market price. If a bond trades at a discount, its yield may exceed the coupon; if it trades at a premium, the yield may be lower.

Taxation: Tax treatment of kuponkimaksut varies by jurisdiction. In Finland, coupon income is generally treated as capital income for individuals, with withholding and rates depending on residence and tax status. Corporate recipients and cross-border payments may be subject to different rules.

See also: bond, coupon rate, fixed income, yield to maturity.