Serial bonds are bundles of several bonds, each with a separate maturity date. The bonds mature slowly over time until the final bond has matured. These bonds are typically designed to finance a project with relatively predictable profits or payments.

Buying Serial Bonds

When you look to purchase a serial bond, you will be quoted a yield rather than a price. The yield will reflect a group of bonds issued together and purchased all on the same date.

Serial Bond Example

A residential property developer needs long-term financing for a large project. The project will have small, consistent revenue streams as different segments of the development open. However, the largest revenue stream will not occur until the project has been completed in 15 years. Instead of taking a loan at interest, the residential developer has issued bonds to private investors for part of the development.

They decide to issue a serial bond because it provides for flexibility over time. The bonds are structured so that there are 5 different maturities within the bond, one occurring every three years. The final bond matures at the anticipated release of the entire project. 

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