balloon interest

Balloon interest

In the context of serial bond issues, the elevated coupon rate on bonds with late maturities.

Balloon Interest

The interest on serial bonds, which are bonds that gradually mature at regular intervals until the whole issue matures. It is called balloon interest because it gradually rises over the life of the bond issue. See also: Balloon Maturity.

balloon interest

A higher interest rate received on the longer maturity bonds of a serial bond issue.
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For example, if a bond were issued at face and called for annual compounding, the balloon interest payment could be paid 5 years and 365 days after the issuance of the debt.
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The company missed a deadline in April to pay a $9 million balloon interest payment it owes bondholders.
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