Balloon Maturity


DEFINITION of 'Balloon Maturity'

1. A repayment schedule for a bond issue where a large number of the bonds come due at a one time (normally at the final maturity date).

2. A final loan payment that is considerably higher than prior payments. This is also known as a "balloon payment."

BREAKING DOWN 'Balloon Maturity'

When a balloon maturity occurs, a company must pay the principal back to borrowers on many bonds at once. If the company is short on cash then it may have trouble making all the payments.

  1. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  2. Bond

    A debt investment in which an investor loans money to an entity ...
  3. Amortization Schedule

    A complete schedule of periodic blended loan payments, showing ...
  4. Default

    1. The failure to promptly pay interest or principal when due. ...
  5. Balloon Loan

    A type of loan which does not fully amortize over its term. Since ...
  6. Bullet

    1) A one-time lump-sum repayment of an outstanding loan, typically ...
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