Coupons & yield

Two numbers come up constantly with fixed income: the coupon and the yield. They are related but not the same, and on Caravan both are disclosure — facts about an instrument, never a way to rank it.

The coupon

The coupon is the interest a bond promises, fixed at issue. Caravan returns it as coupon_rate_bps — an annual rate in basis points (1200 = 12.00% per year) — together with coupon_frequency (coupons per year) and face_value_micros. A single coupon payment is:

coupon_payment = face_value × (coupon_rate_bps / 10000) / coupon_frequency

A coupon date shows up as a corporate action (type=coupon) and on the calendar (event_type=coupon). A zero-coupon bill (coupon_rate_bps = 0) pays no coupon — it is issued at a discount and redeems at par.

The yield

The yield relates the price you pay to the cash you will receive. Because the clean price moves with the market, the same coupon can imply different yields at different prices: pay less than par and the implied yield is above the coupon; pay more and it is below. Yield is therefore a derived view of price, not a property fixed at issue.

Why yield is never a sort key

It is tempting to ask for "the highest-yield bond." Caravan deliberately does not offer that. The bond list is alphabetical, and coupon_rate_bps and any indicative yield are returned as disclosure — there is no sort=yield, no sort=coupon, and no "top yield" surface. Ranking instruments by an apparent reward figure is exactly the merit-ordering FRA Decision 332 / R1 prohibits. See Neutrality by construction.

A higher coupon or yield is not a "better" bond — it usually reflects different terms or risk. The number is information; the choice is the investor's.