Serial Bond

Serial bonds come due at purposely measured durations. Like...We Dig You Tractor Company needs to buy a new factory that’ll cost $100 million. They know that their operating profits will pay back that 100 mil over time, and so they sell 100 million dollars worth of serial bonds to the public that come due in 2 years, 4 years, 6 years, 8 years and then are fully retired a decade later, where every two years a lottery wheel spins and a tranche of those serial bonds is called.

They have effectively staggered the maturity of their bonds, in having these serial bonds come due on different dates. Technically, they could have also just offered 5 different series of bonds, at 20 million bucks each, which come due at different durations. That would be directly staggering the maturities of them.

Why would you want to stagger the maturities of bonds? Because companies do much better refinancing or raising money in small amounts all the time, over long periods of time, rather than, say, having all $14B of principal come due the same week.

Should something go awry, and the company is unable to either refinance that principal or pay it all back, well then, they end up in the company graveyard.