Balloon Maturity means a repayment schedule for a bond issue where a large number of the bonds come due at a one time, usually at the final maturity date. Balloon maturity occurs only in bonds without a sinking fund provision; rather than retiring part of the principal at different times, balloon maturity returns most or the entire principal on a single date. Issuers of bonds with balloon maturities can have difficulty in repayment if they have not set aside a sufficient amount of money.
A final loan payment that is considerably higher than prior payments is also known as a "balloon payment."
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