The dated date of a bond is the calendar day interest officially starts accruing on a new bond issue. It’s set when the offering is structured, printed on the bond’s face or in its digital record, and fixed for the life of the security regardless of when the bond is actually delivered or bought. Every interest calculation that follows — the size of the first coupon, the accrued interest a buyer owes a seller mid-period, the accretion schedule of a zero-coupon bond — runs off this one date.
The Municipal Securities Rulemaking Board defines it as “the date from which interest on a new issue of municipal securities typically starts to accrue.”1Municipal Securities Rulemaking Board. MSRB Glossary of Municipal Securities Terms You’ll find it in the official statement or prospectus.
Dated Date vs. Issue Date
The two dates are usually identical, but not always. The issue date is when the bond formally becomes an obligation of the issuer. The dated date is when interest starts accruing. Federal regulations for U.S. Treasury securities define the dated date as “the date from which interest accrues for notes and bonds,” and note that it will be earlier than the issue date whenever interest needs to start accruing before the bond is officially issued.2eCFR. 31 CFR 356.2 – What Definitions Do I Need to Know to Understand This Part? A common example: if the dated date falls on a Saturday, the issue date lands on the following Monday, but interest has been accruing since Saturday.
That gap matters at purchase. If you buy a newly issued bond on its issue date and the dated date was a few days earlier, a small amount of accrued interest is already sitting on the bond in your favor. The same principle applies when a new issue is delivered days after its dated date: interest accrues from the dated date, not the delivery date, and you’re entitled to what built up in the gap.
How Interest Accrues From the Dated Date
Day zero is the dated date. From that day forward, interest builds at the rate set in the bond’s indenture. For a fixed-rate bond, each day adds a small, predictable amount to what the issuer will pay at the next coupon date. This continues even if you don’t buy the bond until weeks later.
For municipal bonds, MSRB Rule G-33 requires that accrued interest for first coupons be calculated “from the dated date” up to, but not including, the settlement date.3Municipal Securities Rulemaking Board. Rule G-33 Calculations After the first coupon is paid, subsequent accrual periods run from the most recent coupon date, and the dated date recedes into the background.
The calculation itself uses the 30/360 day-count convention. FINRA Rule 11620 specifies that “interest shall be computed on the basis of a 360-day year” and “every calendar month shall be considered to be 1/12 of 360 days.”4FINRA.org. 11620 Computation of Interest Every month is treated as 30 days, so a February and a July look the same on paper. The MSRB applies the same convention for municipal bonds.3Municipal Securities Rulemaking Board. Rule G-33 Calculations
How the Dated Date Sizes the First Coupon
Most bonds pay interest every six months. The distance from the dated date to the first scheduled payment date determines whether the first coupon is standard, short, or long.
- A first payment exactly six months after the dated date produces a standard coupon — the full semiannual amount.
- A first payment less than six months out produces a short coupon covering only the shorter period.
- A first payment more than six months out produces a long coupon compensating for the extra time.
A bond with a 4% annual coupon on a $10,000 face value normally pays $200 every six months. If the first coupon covers only four months, that first payment is roughly $133. Every coupon after the first reverts to the standard $200.
Accrued Interest When You Buy Between Coupon Dates
When a bond changes hands between coupon dates, the buyer pays the seller for the interest built up since the last coupon payment — or since the dated date, if the bond has not yet made its first payment. The buyer then recoups that amount when the full coupon arrives on the next payment date.
Using the 30/360 method, the math is straightforward: multiply the annual coupon by the number of 30/360 days elapsed, then divide by 360. Buy a bond 60 days after its last coupon date with a 5% coupon on a $10,000 face value, and the accrued interest owed to the seller is roughly $83.33 (60/360 × $500). That amount is added to the bond’s price at settlement.
Zero-Coupon Bonds Still Have a Dated Date
Zero-coupon bonds don’t make periodic interest payments. They’re sold at a discount and pay their full face value at maturity. The dated date still matters because it anchors the accretion schedule, the gradual rise in the bond’s value from the discounted purchase price up to face value. MSRB Rule G-33 addresses these separately, using a two-step price calculation for settlement dates that fall before the interest commencement date.3Municipal Securities Rulemaking Board. Rule G-33 Calculations
Tax Treatment of Accrued Interest You Pay at Purchase
If you buy a bond between interest payment dates, the accrued interest you paid the seller has a tax consequence worth knowing about. Your Form 1099-INT at year-end will show the total interest you received on the bond, including the portion that was really the seller’s accrued interest — the amount you fronted at purchase. Without an adjustment, you’d pay tax on money that was never your income.
The IRS lets you subtract it. On Schedule B, list “Accrued Interest” and the amount you paid to the seller, then subtract it from your interest subtotal.5Internal Revenue Service. Publication 550 – Investment Income and Expenses The accrued interest is taxable to the seller who earned it, not to you. Skip this step and you overpay by the amount of accrued interest you covered at purchase.