What is Accrued Interest of US Treasury FRN?

Accrued Interest of US Treasury FRN is the amount of interest that's been accumulated on a US Treasury FRN but has not yet been paid out.

If you purchase a US Treasury FRN, the accrued interest is the interest amount accumulated from the last interest payment date and the settlement date of the purchase transaction.

The accrued interest was earned by the previous owner, but it will be paid to you on the next payment date. So you have to pay it to the previous holder as part of the purchase transaction.

Here are examples of FRN purchase transactions and their accrued interests:

1. If you purchase $100 face value of a FRN at the original auction. you pay $0.00 accrued interest to US Treasury, The settlement date is the original issue date and it has no interest accumulated yet.

2. If you purchase $100 face value of a FRN at the 1st reopening auction. you pay about 1 month of accrued interest to US Treasury, The settlement date is about 1 month after the original issue date.

3. If you purchase $100 face value of a FRN at the stock market and the settlement date happens to be the interest payment date, you pay $0.00 accrued interest to the previous holder. The full interest amount of last quarter is paid to the previous holder directly.

4. If you purchase $100 face value of a FRN at the stock market and the settlement date is 10 days after interest last payment date, you pay 10 days of accrued interest to the previous holder.

⇒ Discount/Premium Price of US Treasury FRN

⇐ Reopening Auction of US Treasury FRN

⇑ US Treasury FRN

⇑⇑ US Treasury Securities