clean price

Think of buying a rented flat in Lekki where the tenant already paid this month's rent to the previous owner. The house has a price tag, but there is also that rent sitting with the seller that has nothing to do with the brick and mortar value of the flat itself. Clean Price works the same way for bonds. It is the sticker price of the bond alone, stripped of any interest that has been piling up calmly since the last time the bond paid out.

Bonds pay interest, usually called a coupon, at set periods, maybe every six months. Between those payment dates, interest keeps accumulating day by day even though no cheque has changed hands yet. If you sell the bond in the middle of that stretch, the buyer owes you that stretch of accumulated interest too, since they will collect the full coupon later and some of it rightly belongs to you for the days you held the bond.

So the Clean Price is just the bond's value on its own terms, no accrued interest attached. Add the accrued interest to it and you get the Dirty Price, which is what actually changes hands on settlement day. Traders and financial news quote Clean Price because it lets you compare bonds fairly without the noise of where each one sits in its payment cycle.

A Nigerian civil servant buying FGN savings bonds through a stockbroker will usually see the Clean Price quoted first, then the final amount they pay includes the accrued bit. Someone in London holding UK gilts will notice the same split on their statement. It is not a trick, it is just good bookkeeping that separates the bond's actual worth from the interest clock ticking underneath it.