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Bond Maturity

Bond maturity refers to the date on which the principal amount of a bond is to be repaid in full to the bondholder. On the maturity date, the issuer is obligated to pay the bondholder the face value (or par value) of the bond, along with any remaining interest payments. Bonds can have short-term, medium-term, or long-term maturities, typically ranging from a few months to 30 years or more. The length of the bond's maturity affects its interest rate, risk, and price volatility, with longer-term bonds generally offering higher interest rates but also higher risk.

Example

A 10-year U.S. Treasury bond purchased in 2024 will mature in 2034. On the maturity date in 2034, the U.S. government will repay the bondholder the full face value of the bond.

Key points

• Bond maturity is the date when the bond's principal is repaid.

• Bonds can have varying maturities, from short-term to long-term.

• The maturity date influences the bond’s interest rate, risk, and price volatility.

Quick Answers to Curious Questions

The issuer repays the bond’s principal amount to the bondholder, along with any remaining interest owed.

Longer-term bonds typically offer higher interest rates to compensate for the increased risk over a longer period.

Short-term bonds mature in a few months to a few years, offering lower yields and lower risk, while long-term bonds mature in 10 years or more, offering higher yields but higher risk.