Short answer: The coupon is the interest rate a bond pays on its face value, fixed when it is issued. The yield is the return you earn a year at the price you pay. Buy below face value (100) and your yield is above the coupon; buy above it and your yield is below. A 5-year bond with a 5.00% coupon paid every six months yields about 5.46% at a price of 98 and 4.55% at 102.
| Price per 100 | Yield to maturity | Versus the 5.00% coupon |
|---|---|---|
| 96 | 5.94% | +94 bp |
| 98 | 5.46% | +46 bp |
| 100 | 5.00% | same |
| 102 | 4.55% | -45 bp |
| 104 | 4.11% | -89 bp |
Bought at 98 and held to maturity, you collect 5.00 a year in coupons plus 2 more at maturity, so the return is above 5%. Bought at 102, you give back 2 at maturity, so it is below 5%.
When market interest rates rise, existing bonds with lower coupons fall in price until their yield matches the market; when rates fall, prices rise.
On 2026-10-21, Australian Government bonds yielded 4.91% for 3 years, 4.96% for 5 years and 5.28% for 10 years (Reserve Bank of Australia). A bank or corporate bond yields more than a government bond of the same term; the difference is its credit spread, which is wider for lower-ranked bonds such as Tier 2.
165 of the 360 AUD bonds on Candour Capital's range can be repaid early by the issuer at a call date. Bank Tier 2 and many fixed-then-floating bonds are quoted on their yield to the first call date, because the market expects them to be called. Compare the yield to call with the yield to maturity and use the lower one.
201 of the bonds on our range are floating rate notes. Their coupon moves with 3-month BBSW, so they are compared on their margin rather than a fixed yield. A note paying BBSW + 1.20% bought at 100.50 with three years to its call date returns roughly BBSW + 1.03%: the 0.50 premium spread over three years.
Indicative prices and yields for every bond on the range are in the Candour app for signed-in clients, and from a Candour Capital adviser.
General information only. It does not take into account your objectives, financial situation or needs and is not a recommendation. Investment opportunities through Candour Capital are for wholesale and professional investors only. Read the offer documents and seek professional advice before investing.