Constant Maturity

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Constant Maturity

Describing all bonds with a maturity on a certain date. This is used to help compare the yields on Treasury, corporate, and other bonds. Mortgage banks also use constant maturity yields to help them determine interest rates on mortgages. Most often, the Federal Reserve provides constant maturity quotes to investors.
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The borrower has the option of floating the interest rate at prime minus .5 percent or at LIBOR plus 2.25 percent and, when the property's occupancy has stabilized, has an additional option to convert all or a portion of the debt to a fixed rate at a pre-determined spread over Treasury Constant Maturities. This financing instrument includes a 25-year amortization schedule and a 10-year term and is non-recourse to the borrowing entity.
(2) Yields on actively traded issues adjusted to constant maturities.

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