Multimaturity Bond

multimaturity bond

See put bond.

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Multimaturity Bond

A bond that a holder may require the issuer to redeem before maturity. When this occurs, the issuer must pay par to the holder, who loses any future coupon payments that he/she might otherwise have been due. An advantage to a multimaturity bond from the holder's standpoint is the fact that the holder may reinvest the par value in a new bond in a time of rising interest rates. This protects the holder from certain types of interest rate risk.

Multimaturity bonds come in two main forms. The first allows the holder to demand redemption on any of several days throughout the life of the bond, while the second only allows this on one particular day. Multimaturity bonds are also known as variable rate demand obligations, option tender bonds, or put bonds.