Bond Equivalent Yield (BEY) is a standardised yield calculation that converts the yield of a bond paying interest on a semi-annual basis — or the yield of a discount instrument like a treasury bill — into an annualised rate expressed on the same basis as bonds that pay semi-annual coupons. This enables direct, apples-to-apples comparison between instruments with different payment frequencies. For a treasury bill or zero-coupon instrument, BEY = [(Face Value – Purchase Price) ÷ Purchase Price] × (365 ÷ Days to Maturity). For a bond that pays coupons semi-annually, BEY = 2 × Semi-Annual Yield. In India, the 91-day, 182-day, and 364-day Treasury Bill yields published by the RBI after weekly auctions are typically expressed on a discount yield or annualised basis — converting them to BEY enables comparison with the yields of G-Secs and corporate bonds that pay semi-annual or annual coupons. For Indian fixed income investors and institutional portfolio managers comparing the relative attractiveness of short-term money market instruments against medium and long-term bond yields, BEY provides the consistent yield metric needed for cross-instrument comparison and investment decision-making.
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