Maturity Date
The date upon which the principal of a bond becomes due and payable to the bond owner.
bond-basics
Capital Appreciation Bonds (“CABs”)
Bonds that pay no Interest until the Maturity Date. In lieu of paying Interest on regularly scheduled dates prior to the Maturity Date, the Interest on the Bonds is treated as accreting, or accumulating, periodically, and gets added to the Bonds’ Principal amount until the Bonds reach their Par Value at their Maturity Date. Accordingly, CABs are priced at a substantial discount from their Principal amount.
See Also
Interest
The amount of compensation for the use of borrowed money paid to the bondholders by the issuer or the borrower.
Bullet Maturity
A single, fixed principal payment at maturity with no mandatory sinking fund redemption feature.
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Credit Enhancement
The use of the credit of an entity having greater financial strength than the issuer or borrower to improve the credit quality of a bond issue.