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Bonds & RatesGlossary

Maturity

A bond's maturity is the date the issuer must repay its face value. Plain-English definition, why longer maturities move more with rates, and an example.

Also called: maturity date, term to maturity

By The Token Thesis Desk2 min read4 cited sources

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Quick answer

Maturity is the date a bond comes due. On that date the issuer pays the final interest payment and repays the bond's face value. The time left until then is often also called the bond's maturity.

What does maturity mean?#

FINRA explains that most bonds have a maturity date set when they are issued, and that on that date the borrower pays bondholders the final interest payment and the bond's face value, also called par value[1]. In another article FINRA describes maturity simply as the date on which an issuer must repay a bond's principal in full[2].

Investor.gov uses the same idea: the issuer repays the principal when the bond matures, or comes due after a set period of time[3]. People also use maturity for the length of that period — "a 10-year maturity" — and FINRA groups bonds as short-term (one to three years), intermediate-term (four to 10 years) and long-term (more than 10 years)[1].

Why does maturity matter so much?#

The SEC notes that the longer a bond's maturity, the greater the risk that its value is affected by changing interest rates before it matures[4]. The example below shows how large that difference can be.

Worked example

A 4% bond when market rates rise to 5%

Same $1,000 bond, same 4% coupon paid twice a year, same one-point rise in market rates. Only the time left to maturity changes. A 10-year bond issued in 2026 would mature in 2036 and make 20 half-yearly coupon payments along the way.

Time left to maturityPrice after rates rise to 5%Change
1 year left$990.36-1.0%
5 years left$956.24-4.4%
10 years left$922.05-7.8%
30 years left$845.46-15.5%

Figures computed in code from the stated inputs; rounded to the nearest cent or tenth.

If you hold to maturity and the issuer pays, those price swings do not change what you receive: the stated interest plus face value[4]. Selling before maturity is when they matter.

Is maturity the same as duration?#

No. FINRA distinguishes the two: maturity is a date, while duration measures how much a bond's value is likely to change when interest rates move[2]. Longer maturities generally mean higher duration[2]. See why bond prices fall when rates rise, Treasury bills, notes and bonds for maturities by Treasury type, and the yield curve, which plots yields by maturity.

Sources

Numbers in brackets in the text point here. Grade A = primary source (regulator, statistics agency, law or official document).

  1. 1
    BondsFINRA (n.d.) · Grade A
  2. 2
  3. 3
    Bonds (glossary)U.S. SEC — Investor.gov (n.d.) · Grade A
  4. 4

How we checked this note

Every number, date and rule above links to its source. This note cites 4 sources, 4 of them primary (Grade A). Worked examples were calculated in code, and a second editor compared each figure with its source before publishing. Spotted an error? Tell us — corrections are listed on the note. Read our editorial policy.