What Is the Dated Date?
Often used to identify a particular series of bonds of an issuer, the dated date is the date on which interest begins to accrue on a fixed-income security. Investors who purchase a fixed-income security between interest payment dates must also pay the seller or issuer any interest that has accrued from the dated date to the purchase date, or settlement date, in addition to the face value.
Understanding Dated Date
Investors buy bonds issued by corporations, the government, and municipalities in order to receive interest income. Many bonds guarantee a periodic payment of coupon or interest to bondholders until the bond matures. For example, a bond with a par value of $1,000 and a 5 percent coupon rate to be paid semi-annually will pay its investors 5 percent/2 x $1,000 = $25 every six months. Let’s assume the newly issued bond was sold sometime in January 2018 and its maturity date is February 1, 2023. If interest payments are scheduled for February 1 and August 1 every year until the bond matures, the dated date will be February 1, 2018. An investor will receive his first $25 on the first coupon date, August 1, 2018. The first coupon period, then, is the period from the dated date until the first coupon date.
The dated date is the date when interest starts to accrue on bonds and notes. Within the first coupon period, the days from coupon to settlement will always be computed with reference to the dated date. An investor who purchases the bond pays the amount equal to the interest accrued from the dated date to the settlement date and is reimbursed for the additional interest when the issuer makes the first interest payment on the security.
If the fixed-income security's date of issuance is the same as the dated date, the dated date is also the issue date. It is also possible that a coupon paying bond is issued after the first accrual date, in which case, the issue date, and the dated date will be different. A difference may occur between both dates since issue dates cannot fall on a holiday or weekend. For example, a dated date may be on Saturday, but the issue date will be the following Monday. If the issue date falls after the dated date, the bond will be traded with accrued interest. In effect, the dated date can be on, before, or after the issue date.