An issue of bonds that gradually matures at regular intervals until the whole issue matures. Corporate bonds are sometimes serial bonds. In these situations, a corporation issues bonds and it sells them to any investor who will buy, and the bonds mature at different times. Serial bonds are most useful to finance a project with regular income streams with which to pay off the serials. Some municipal bonds and corporate bonds combine aspects of both term and serial issues in which some parts of the issue mature at various times but in which the bulk matures all at once. See also: Term Bonds.
Bonds issued under a single indenture simultaneously with groups of the bonds that are scheduled to mature periodically. For example, a municipality may issue $40 million of bonds with $2 million scheduled to mature each year for 20 years. Many bond issues are a combination of serial bonds and term bonds.
Case Study The Private Colleges and Universities Authority of Georgia in fall 2001 issued $211,815,000 of tax-exempt bonds for Emory University, a privately endowed research university located in Atlanta. The Private Colleges and Universities Authority was created to facilitate the financing and refinancing of facilities for use by private institutions for higher education within the state of Georgia. Proceeds from the bond issue were to be used by the university to finance several projects, including a cancer center, a performing arts center, a primate research center, and equipment for an existing university hospital. The bond issue consisted primarily of series bonds that matured annually from 2002 through 2021. Yields to maturity ranged from 2.18% for bonds of the shortest maturity to 5.09% for bonds maturing in 2021. In addition to serial bonds, the issue included $17 million of term bonds maturing in 2031 that yielded 5.21%, and an additional $2 million of term bonds scheduled for maturity two years later in 2033. Like many municipal bond offerings, this issue offered a wide variety of maturities so that investors could choose bonds with maturities that best fit their portfolio requirements. For example, investors with a long investment horizon could lock in a tax-exempt yield for 15 to 20 years while other investors who might need their funds relatively soon were able to choose bonds scheduled for repayment in 4 or 5 years. These bonds were particularly attractive to Georgia residents, who were not required to pay either state or federal income taxes on the interest income.