What does "maturity of bonds" refer to?

The term "maturity of bonds" refers specifically to the point in time when the bond's principal amount is repaid to the bondholder. This is a critical concept in municipal finance and bond investment because it establishes the length of the investment period and indicates when the investor can expect to receive the full return of their initial investment.

At maturity, the issuer is obligated to pay back the face value of the bond, which is typically the amount that was borrowed. This is distinct from the time when interest payments are made, as interest is generally paid periodically during the life of the bond rather than at its maturity. Understanding the maturity of a bond is essential for assessing investment risks and yields, as it impacts cash flow planning and strategies for reinvestment.

Maturity is not related to the worthlessness of the bond or the time of issuance; rather, it is a definitive point that signifies the end of the bond's life cycle as a debt instrument. Thus, knowing the maturity date helps both investors and issuers in planning their financial activities and obligations accordingly.