Actual/364: Definition & Meaning | Bondfish
Actual/364 is a day-count convention that calculates interest by dividing the actual number of days in the period by a year of 364 days — exactly 52 weeks.
What it means
Most “actual” conventions count the true calendar days between two dates and then divide by an assumed year length — 360, 365, or the actual year. Actual/364 uses a 364-day year because 364 divides evenly into weeks: 52 weeks of 7 days.
That makes it a natural fit for money-market instruments issued in whole numbers of weeks, such as 13-, 26- or 52-week bills, where interest periods are always multiples of 7 days. It appears in a handful of markets — certain government T-bill and deposit conventions — rather than in mainstream global bond documentation.
Why it matters for bond investors
Because 364 is slightly smaller than 365, dividing by it makes each day worth marginally more interest than under Actual/365. Over a 26-week bill the difference is small but real, and quoted rates are only comparable when you know the basis behind them. Before comparing a short-term instrument’s rate with a bond’s yield to maturity, check the day-count convention in its terms.
Example
Interest factor = actual days ÷ 364.
A 26-week bill runs exactly 182 days → 182/364 = 0.5. At a 4% rate on 10,000: 10,000 × 4% × 0.5 = 200 of interest.
Related terms
This definition is for general information only and is not investment advice. Bond investing involves risk, including possible loss of principal.