Clean Price vs Dirty Price: What You Pay for a Bond
Clean Price vs Dirty Price: What You Actually Pay for a Bond
Understand clean price, accrued interest, dirty price, settlement amount and charges before confirming a secondary-market bond order.
Three numbers decide what you pay for a listed bond in the secondary market: the clean price, accrued interest and dirty price.
The clean price is usually the number you notice on a bond listing. The dirty price is closer to what leaves your bank account. The difference between them is not a fee or a markup. It is interest that has built up since the bond’s last coupon date.
Dirty price = Clean price + Accrued interest
What Is the Clean Price of a Bond?
The clean price is the price of the bond itself, excluding interest that has accumulated since the last coupon payment.
It reflects market conditions such as interest rates, the issuer’s credit standing, the bond’s remaining tenure, demand and supply.
- A quote of 101.20 on a ₹1,000 face-value bond means ₹1,012 per bond.
- Some platforms display the clean price directly in rupees.
- Clean price excludes accrued interest.
What Is Accrued Interest?
A bond’s coupon is paid on fixed dates. Between those dates, interest builds up day by day. That built-up amount is accrued interest.
The seller has held the bond since the last coupon date, so the interest for those days belongs to the seller. The buyer pays that amount as part of settlement and receives the full next coupon if the issuer pays as scheduled.
- The seller earns interest for the period they held the bond.
- The buyer pays that accrued amount at settlement.
- The buyer receives the full next coupon, subject to issuer payment.
What Is the Dirty Price?
The dirty price, also called the full price or invoice price, is the clean price plus accrued interest.
Dirty Price = Clean Price + Accrued Interest
Multiply the dirty price by the quantity to calculate the consideration for the bonds. Add stamp duty and separately disclosed charges to arrive at the total outlay.
Clean Price vs Dirty Price: Worked Example
Illustrative and hypothetical—not a live offer, live price or recommendation.
| Term | Illustrative Value |
|---|---|
| Face value | ₹1,000 per bond |
| Coupon rate | 9.00% per year |
| Quoted clean price | ₹1,012 per bond |
| Settlement date | 5 November 2026 |
| Quantity | 50 bonds |
Annual coupon per bond = ₹1,000 × 9.00% = ₹90.
Accrued interest per bond = ₹90 × 235 ÷ 365 = approximately ₹57.95.
Dirty price per bond = ₹1,012 + ₹57.95 = approximately ₹1,069.95.
| Line Item | Per Bond | For 50 Bonds |
|---|---|---|
| Clean price | ₹1,012.00 | ₹50,600.00 |
| Accrued interest | ₹57.95 | ₹2,897.26 |
| Dirty price / consideration | ₹1,069.95 | ₹53,497.26 |
Record Date and the Ex-Interest Window
The record date is when the issuer, through the depositories, checks who holds the bond. Whoever holds the bond in their demat account on that date receives the upcoming coupon.
If you are buying close to a coupon date, check the record date, next coupon date and the way accrued interest is displayed before confirming the transaction.
- The bond may trade ex-interest.
- The upcoming coupon may go to the seller.
- Accrued interest may be lower or negative depending on the convention.
How Clean Price, Dirty Price and YTM Fit Together
Yield to maturity is calculated using the amount actually paid against the future coupon and principal cash flows, subject to the stated assumptions.
- A higher clean price generally means a lower yield for the same bond.
- A lower clean price generally means a higher yield.
- Accrued interest itself does not change the underlying yield economics.
- Fees and stamp duty can reduce the effective return.
Where Charges and Stamp Duty Fit
The dirty price is what you pay for the bond itself. Your total outlay may also include stamp duty, platform or brokerage charges and depository participant charges.
- Stamp duty
- Platform or brokerage charges
- Depository participant charges
- Applicable taxes on charges
Accrued interest is designed to come back through the next coupon, subject to the issuer paying. Charges and stamp duty are separate transaction costs.
Checkout Checklist
- Confirm the ISIN.
- Check whether the displayed price is clean or dirty.
- Review the settlement date.
- Check the accrued-interest amount.
- Review the record date and next coupon date.
- Identify stamp duty and other charges.
- Check the basis of the displayed YTM.
Key Takeaway
The clean price is the bond’s market price. Accrued interest compensates the seller for the time they held the bond. The dirty price is the clean price plus accrued interest and forms the basis of settlement.
Explore Listed Bonds
Review issuer details, price, yield, maturity, security status and risk disclosures before investing.
Explore Listed BondsRisk Disclosure: Investments in listed corporate bonds and other debt securities are subject to market risks, including credit risk, interest-rate risk, liquidity risk and market risk. Returns are not guaranteed. Credit ratings are opinions regarding credit risk and are not recommendations to buy, sell or hold any security. Please read the offer document, term sheet and applicable risk factors carefully before investing.
