2.4.3 Maturity Structure
New issues of bonds may be structured to mature in one of two ways. First, term bonds are those in which the entire issue is scheduled to reach maturity on the same date. Term bonds offer a single interest rate.
Example: A corporation issues $20 million of term bonds with a maturity of 10 years. This means that all bonds will mature at the end of 10 years and the corporation must repay the entire $20 million of principal at maturity.
Second, a serial bond is a bond issue whose maturities occur in different installment periods over a set length of time.
Example: A corporation issues $20 million of serial bonds that come due in $2 million installments during each of the years of the bond issue’s 10-year life.
A serial bond issue
