Actual/365L: Definition & Meaning | Bondfish
Actual/365L (Actual/365 Leap year) is a day count convention that divides the actual number of days in an interest period by 366 when the period involves a leap year, and by 365 otherwise.
What it means
Unlike Actual/365F, whose denominator is always 365, Actual/365L adjusts for leap years. The standard rule: for annual coupons, the denominator is 366 if February 29 falls within the interest period; for more frequent coupons, it is 366 if the period’s end date falls in a leap year, and 365 otherwise.
The convention appears mainly in some floating-rate notes — notably certain sterling FRNs — and in legacy money market instruments. You will find it specified in a bond’s prospectus alongside the coupon formula.
Why it matters for bond investors
Day count conventions decide exactly how much accrued interest changes hands when you buy or sell between coupon dates. Around a leap year, Actual/365L produces a slightly smaller daily accrual (1/366 instead of 1/365) than Actual/365F. The differences are small per day but can matter on large trades — and they explain why two bonds with identical coupons can accrue slightly different interest.
Example
Interest = Principal × Rate × (Actual days / 365 or 366)
Semi-annual period ending 30 Jun 2028 (leap year): denominator = 366
£10,000 at 5% for 182 days: 10,000 × 0.05 × 182/366 = £248.63
Related terms
This definition is for general information only and is not investment advice. Bond investing involves risk, including possible loss of principal.