Term Versus Serial Bonds

Written by True Tamplin, BSc, CEPF®

Updated on July 22, 2022

Definitions

Term Bonds

Term bonds are bonds whose entire principal amount is due on a single date. Most corporate bonds are term bonds.

Serial Bonds

Serial bonds have principal payments that are required at specific intervals. Serial bonds are often issued by state or local municipalities.

Example

Suppose that the city of San Francisco issues $5 million of serial bonds whose terms require that $500,000 of the bonds are repaid every 5 years, beginning 5 years after the date of issue.

Thus, for the first 5 years, $5 million in bonds will be outstanding; and for the second 5 years, $4.5 million will be outstanding; and so forth.

From the perspectives of both the investors and the issuer, serial bonds help to ensure that the issuer will be able to repay the entire principal.

Term Versus Serial Bonds FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.