When you buy an FR Bond, you need to pay the Accrued Interest to the previous owner. Why? Because the bond’s coupon is paid every 6 months, but it’s calculated on a daily basis. So, if you buy the bond in the middle of the coupon period, part of the coupon actually belongs to the previous owner.

By paying this Accrued Interest, you will receive the full coupon amount at the next payment date.

Example: You buy an FR0100 bond on March 10, 2025. This bond pays coupons on February 15 and August 15. Since you bought the bond after February 15, you need to pay the Accrued Interest from February 15 to March 10 to the previous owner.

In return, when the coupon is paid on August 15, 2025, you will receive the full coupon for the period from February 15 to August 15, even though you didn't hold the bond from the start of the period.