Bullet Bond

A bullet bond is a standard debt instrument where the entire principal amount is repaid in one lump sum on the maturity date, with only periodic coupon interest payments made during the bond's life. This is in contrast to amortising bonds, where the principal is repaid gradually. Bullet bonds are the most common structure in the government securities and corporate bond market in India. Because no principal is returned until maturity, bullet bonds carry more interest rate risk (higher duration) than amortising bonds of the same maturity. Investors holding bullet bonds to maturity receive the full face value on the redemption date along with the final coupon payment.