When you invest in a bond on Mintos, the price you pay may look a little different from what you might have experienced with loans. This article explains the three key components that make up the total cost of investing in a bond.
1. What is a bond price?
Every bond has a face value (also called nominal value), which is the amount the bond issuer promises to repay when the bond reaches maturity. On Mintos, this is the amount on which your coupon (interest) is calculated.
However, bonds are traded on the market, and their market price can be higher or lower than the face value. This is expressed as a percentage:
| Price | What it means | Example (€1000 face value) |
| 100% | Bond trades at face value ("at par") | You pay exactly €1000 |
| Above 100% | Bond trades at a premium | At 106%, you pay €1060 |
| Below 100% | Bond trades at a discount | At 95%, you pay €950 |
💡 Why does the price change? Bond prices typically move in response to market conditions, mainly changes in interest rates and the creditworthiness of the issuer. A bond paying a higher coupon than current market rates will generally trade above face value (at a premium), because it offers better returns than new bonds being issued today. |
2. What do the premium and discount mean for you?
Buying at a premium (price above 100%)
When a bond's market price is above face value, you are paying extra. This extra amount is called a premium.
Important: the premium is not repaid at maturity. At maturity, you receive the face value only, not what you paid. This reduces your overall return compared to the coupon rate alone, which is why the yield to maturity (YTM) shown on Mintos will be lower than the coupon rate.
📌 Example You invest €1000 (face value) in BondABC Oct 2027. The bond trades at 106%, so you also pay a €60 premium. At maturity, you receive back €1000 – not €1,060. The premium is the price you paid for a bond that offers above-market returns. Your YTM of 6.4% already accounts for this. |
Buying at a discount (price below 100%)
When a bond's market price is below face value, you pay less than the face value upfront. At maturity, you still receive the full face value – meaning that difference is built-in profit on top of your coupon payments. This pushes your YTM higher than the stated coupon rate.
| Scenario | What you pay | What you receive at maturity | Effect on YTM |
| At par (100%) | = Face value | = Face value | YTM ≈ coupon rate |
| At a premium (>100%) | > Face value | = Face value | YTM < coupon rate |
| At a discount (<100%) | < Face value | = Face value | YTM > coupon rate |
3. What is accrued interest?
Bonds pay interest (coupons) on fixed dates – for example, every quarter. Between those dates, interest is building up day by day. This is called accrued interest.
When the portfolio invests in a bond mid-way through a coupon period, the previous owner has technically already earned some of that interest, but they won't be around to collect the next coupon. So, the purchase price includes that accrued interest as compensation to the seller.
✅ Accrued interest is not a fee – it's a timing adjustment The accrued interest you pay at purchase is not a fee; you’re just paying for the accrued interest the previous bondholder had earned while holding the bond. When the next coupon date arrives, the bond issuer pays you the full coupon for the entire period, which covers this amount. |
How it works
- Your High-Yield Bonds portfolio buys, or you manually cherry-pick a bond and buy it 20 days into a 90-day quarterly coupon period.
- €5.50 in interest has accrued over those 20 days.
- Your deposit covers €5.50 as part of the purchase.
- On the next coupon date (in about 70 days), you will receive the full quarterly coupon, including the €5.50 already paid, if the issuer meets its obligations.
Net result: the accrued interest portion has no impact on your final return.
4. Your total investment
When you invest in a bond on Mintos, the total amount you pay is made up of three parts:
| Component | Amount | Repaid at maturity? |
| Face value (nominal) | €1,000.00 | ✅ Yes |
| Premium (price above par) | €69.08 | ❌ No |
| Accrued interest | €4.97 | ✅ Yes (via next coupon) |
| Total cost | €1,074.05 |
- The face value is the core of your investment – what you'll receive back and what your coupon is calculated on.
- The premium is the market price you pay for a bond that offers attractive returns. It does not come back, but it is reflected in the YTM.
- The accrued interest is a temporary upfront payment that you recover in full with the next coupon.
5. Why is YTM the most important number?
The yield to maturity (YTM) shown on Mintos gives you a single, honest number for your expected annual return. It accounts for:
- The coupon payments you'll receive
- The premium or discount you paid versus what you'll get back at maturity
- The exact timing of all cash flows, including accrued interest
This means you don't need to mentally adjust the coupon rate yourself – the YTM already tells you your true return if you hold the bond to maturity.
⚠️ YTM assumes you hold to maturity If you sell the bond before maturity on the secondary market, your actual return may differ – it will depend on the price you sell at and how long you held the bond. |
6. Quick reference glossary
| Term | Plain-language definition |
| Face value | The bond's nominal amount — used to calculate coupons, repaid at maturity |
| Clean price | The bond's market price, expressed as a % of face value, excluding accrued interest |
| Dirty price | The actual price you pay: clean price + accrued interest |
| Premium | The extra amount you pay when a bond trades above 100% of face value |
| Discount | The savings you get when a bond trades below 100% of face value |
| Accrued interest | Interest earned since the last coupon date, paid by buyer and returned via next coupon |
| Coupon | Regular interest payment made by the issuer, calculated on face value |
| YTM (Yield to Maturity) | Your total annualized return if you hold the bond to maturity |