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What is a step-up bond?

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BenutzernameMoneyland User Questions
Status Member
Registriert seit1/27/17
Beiträge2142

May 22, 2017, 12:07:00 PM

What is a step-up bond and how does it differ from regular bonds?

BenutzernameMoneyguru von moneyland.ch
OrtSchweiz
Status Expert
Registriert seit8/4/15
Beiträge4072

May 22, 2017, 2:53:40 PM

Hi there,

Step-up bonds are bonds which have increasing coupon payments. When you hold this kind of bond, the coupon payments you receive as a bond holder increase at certain intervals (every year, for example) throughout the bond term.

When a step-up bond matures, the face value of the bond is paid out to the holder as with standard bonds. Step-up bonds can be beneficial because the increasing coupon payment help compensate for possible inflation.

Best regards from Moneyguru

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