Maturity: Meaning of the Maturity Date

What is maturity?

Maturity is the date on which the issuer of a bond must repay the bond's face value to the holder, and the bond stops existing.

The maturity date is fixed in the bond's terms when it is issued. Until that date the holder usually receives coupon (interest) payments. On that date the holder receives the face value (par value) and, for a coupon bond, the last coupon.

A worked example (hypothetical)

A government issues a bond with a face value, a fixed coupon and a stated maturity date.

• Before maturity: the holder receives coupon payments on the scheduled dates. The bond's market price can move above or below face value as interest rates and credit risk change.
• On the maturity date: the issuer pays the full face value plus the final coupon, whatever the bond's market price was the day before.
• After maturity: no more payments are due, and the bond is removed from the register.

If an investor bought the bond below face value and holds it to maturity, the difference between the purchase price and face value is part of the return. If the investor sells before maturity, the price received depends on the market at that moment and can be lower than the purchase price.

Where you see the term

• Bond listings and auction results: each issue is identified by its coupon and maturity date. Pakistani T-bills, Pakistan Investment Bonds and government Sukuk are described this way. See bond auction.
• Account statements: holdings often show a "maturity" column next to the face value and coupon.
• News: phrases such as "debt maturing this year", "maturity profile" or "rollover of maturing debt" refer to repayments the borrower must make or refinance.
• Bank products: term deposits and certificates also have a maturity date. See saving, investing, loans.

Formal definition and edge cases

Formally, maturity is the date on which the final principal payment falls due under the instrument's terms. Term to maturity (or remaining maturity) is the time left until that date. It differs from the original term set at issue.

Edge cases experienced readers should know:

• Callable bonds: the issuer may redeem the bond before maturity, so the actual repayment date can come early. Analysts often quote yield to call as well as yield to maturity.
• Puttable bonds: the holder may demand early repayment on set dates.
• Amortising bonds and sinking funds: principal is repaid in parts over the bond's life, so the maturity date is only the last repayment. See amortization.
• Perpetual bonds: they have no maturity date at all.
• Non-business days: if maturity falls on a holiday, the bond's business-day convention sets the actual payment date.
• Default: if the issuer cannot pay on the maturity date, the bond is in default.
• Maturity is not duration: duration measures price sensitivity to interest rates and is shorter than maturity for coupon bonds.
• Derivatives use "expiry": futures and options have an expiry date. Spot forex and many CFDs have no maturity. Positions in them stay open until closed, with overnight swap fees where they apply.

Related terms

• Accrued interest
• Credit spread
• Eurobond
• Forward contract
• Cash vs physical settlement
• Islamic finance, for how Sukuk are structured
• Trading glossary

Frequent questions

What does maturity date mean in simple words?

It is the day a bond or deposit ends and the borrower repays the principal to the holder.

Is bond maturity the same as expiry?

They are similar ideas. "Maturity" is used for bonds and deposits, and "expiry" is used for options and futures.

Can a bond be repaid before its maturity date?

Yes, if it is callable or puttable, or if the issuer buys it back. Otherwise repayment happens at maturity.

Do I get face value if I sell before maturity?

Not necessarily. You get the market price at the time of sale, which can be above or below face value.

Do forex positions have a maturity?

Spot forex and most CFD positions have no maturity date. They stay open until you or the broker close them. Leveraged positions can lose money fast.