How often do most corporate and municipal bonds pay interest to bondholders?

Most corporate and municipal bonds pay interest to bondholders on a semi-annual basis. This means that bondholders receive interest payments twice a year, which is a standard practice in the bond market. This semi-annual payment structure helps to provide bondholders with a consistent income stream, reflecting the issuer's obligation to compensate them for the use of their capital.

The choice of semi-annual payments is primarily due to market conventions and investor preferences. Investors typically prefer the regularity of semi-annual payments as it aligns with their cash flow needs while also making it easier for issuers to structure their debt obligations. This practice helps in maintaining liquidity in the bond market and is particularly common among both corporate and municipal bonds.

Other payment frequencies exist, but they are less common. While some bonds may pay interest monthly or quarterly, this is not usually the case for the majority of corporate and municipal bonds. Annual payments are also possible, but they are often less desirable from an investment perspective compared to the more frequent semi-annual payments.