What is a Term Bond?
Term bonds are new bonds that are issued by a municipality and carry a single maturity date. The term bond may be issued as a stand-alone bond or include several term bonds issued under the umbrella of a serial bond issue. In all instances, the bond or bonds that are part of the term bond issue will carry the same maturity. The use of a term bond approach is very common. Along with frequent use as the platform for municipal bonds, the term bond is also utilized with many corporate bond issues. Part of the attraction is that the single date of maturity makes the management of the bond clean and simple. When the maturity date is reached, the bondholder is paid the amount owed by the issuer of the bond, and the deal is considered complete. For the investor, a term bond situation can also be attractive. Because of the structure of the payment of the principle and dividends at the point of maturity, there are no taxes to pay during the life of the bond. Instead, the bondholder will pay taxe
