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Serial Maturity

Categories: Bonds, Banking, Muni Bonds

How long has that box of Cheerios been in the cupboard?

Yeah, it's not about that.

In debt offerings with serial maturity, a portion of the total outstanding debt is retired or bought back by the issuer each period or "serial time."

Example

Shmoopazon is a public company, which just sold $1 billion worth of bonds. It is going to buy back $100 million of them every 6 months after 3 years have passed. It picks by lottery which bonds it'll buy back, usually in $25,000 units, and if your number is called, well, lots of soup for you. You get your principal cash back, plus usually a small premium, plus whatever interest would have accrued in the previous period. You can then spend that money on Grape Nuts, which is a very mature cereal.

Find other enlightening terms in Shmoop Finance Genius Bar(f)