Maturity Date

What is a maturity date?

A maturity date is the date when a debt instrument—such as a bond, certificate of deposit (CD), mortgage, or loan—must repay its principal and any accrued interest. It marks the end of the legal obligation between borrower and lender or issuer and investor. After maturity, regular interest payments stop and the principal is returned to the holder.

How it works

• The maturity date defines the lifespan of a security or loan and tells investors when they will receive their principal back.
• Examples:
• A two-year CD matures 24 months after issuance, when the issuer returns the principal.
• A 30-year mortgage matures after 30 years, when the borrower must have repaid the loan balance.
• For derivatives (options, futures), the maturity date is often called the expiration date.
• Some fixed‑income securities are callable, meaning the issuer can repay principal before the stated maturity date, which ends future interest payments early.

Types of maturity

Bonds and other debt instruments are commonly classified by term to maturity:
– Short-term: up to 3 years
– Medium-term: 3 to 10 years
– Long-term: more than 10 years

These categories help investors compare interest rate risk, yield expectations, and suitability for different goals.

Special considerations

• Interest rates and yield:
• Longer maturities typically offer higher coupon rates to compensate for greater credit risk and inflation uncertainty over time.
• As a bond approaches maturity, its price volatility generally decreases and its yield-to-maturity converges toward the coupon rate.
• Callable securities:
• If a bond is callable, the issuer may redeem it early, which can shorten the expected life of the investment and reduce future interest income for the investor.
• Default and bankruptcy:
• If an issuer defaults, bondholders have claims on assets, but recovery and priority depend on whether bonds are secured or unsecured and on the bankruptcy process.

Finding a bond’s maturity date

The final maturity date is listed in the bond’s official documents (offering circular, prospectus, or bond indenture). It may appear in sections labeled “Final Maturity,” “Terms,” or similar.

Example

An investor who bought a 30‑year Treasury bond in 1996 with a maturity date in 2016 would have received semiannual interest payments during the term. As the bond approached maturity, its yield-to-maturity and coupon rate would have converged; at maturity the investor received the full principal, closing the investment.

Key takeaways

• The maturity date is when principal and accrued interest are due and the debt obligation ends.
• Maturity length influences interest rates, price volatility, and risk exposure.
• Check bond documents for the exact maturity date and whether the security is callable.
• In default scenarios, bondholders’ recovery depends on bond seniority and security.