What the characteristic requires
Under the 2014 ISDA Credit Derivatives Definitions, an obligation has the Maximum Maturity characteristic when its remaining maturity is not longer than the period the trade specifies. Standard corporate trades specify 30 years.
Two points follow from the wording:
- It is remaining maturity, not original tenor. What counts is how long the obligation still has to run, not how long it had when issued.
- It is measured from the Delivery Date. The clock runs from the date the obligation would be delivered, which comes after the credit event.
- An accelerated obligation has a remaining maturity of zero. Once an obligation has been accelerated or otherwise become due and payable, as the Dean Foods notes were on its Chapter 11 filing, its remaining maturity is zero, which is within any limit.
Maximum Maturity is one of several characteristics. A bond that passes it must still meet the others the trade lists, such as Not Subordinated and Specified Currency and Transferable.
How CDSBench measures it
The Delivery Date is not known when a case is analysed, so Mastermind measures remaining maturity from the credit event date recorded on the case. That is conservative: any later Delivery Date only shortens the remaining maturity. The test is a date comparison. The limit is the event date plus 30 years, and the bond passes if its maturity date falls on or before that limit.
A bond that fails on this measure can only pass for a Delivery Date late enough to bring it inside the limit. Mastermind reports that date, so a near miss is visible rather than hidden.
Why most bonds pass
A 30-year cap only bites on very long-dated debt: bonds issued with terms well beyond 30 years that are still early in their life, and instruments with no fixed maturity at all. A perpetual instrument has no remaining maturity that could fall within a 30-year limit, which is why perpetuals are generally treated as failing this characteristic.
A bond issued with a term of 30 years or less passes from the day it is issued, and every year that passes brings any bond further inside the limit. Only bonds issued with longer terms, or with no maturity, can fail. For everything else the practical risk is not the limit itself but getting the maturity date wrong.
What to check in the documents
- The maturity date in the note form or maturity clause, not the bond’s name. “Due 2026” in a title is a year, not a date; CDSBench treats a date read off a name as a placeholder, not a term of the notes.
- Supplemental indentures and exchanges that extend or change maturity after issue.
- The trade’s own elections. The 30-year figure is the standard; a confirmation can specify a different period.
The three published cases
| Bond | Credit event | Maturity | Scheduled maturity remaining at the event (before any acceleration) | 30-year limit (from the event) |
|---|---|---|---|---|
| Rite Aid 8.000% Senior Secured Notes due 2026 | 15 Oct 2023 (Bankruptcy) | 15 Nov 2026 | about 3 years 1 month | 15 Oct 2053 |
| Dean Foods 6.500% Senior Notes due 2023 | 12 Nov 2019 (Bankruptcy) | 15 Mar 2023 | about 3 years 4 months | 12 Nov 2049 |
| New Fortress Energy 6.500% Senior Secured Notes due 2026 | 17 Dec 2025 (Failure to Pay) | 30 Sep 2026 | about 9½ months | 17 Dec 2055 |
Each maturity date comes from the bond’s own indenture, filed with the SEC; the limit is Mastermind’s conservative, event-date measure.
In practice
Three real bonds, three passes
All three published cases pass Maximum Maturity by a wide margin. The deciding fact in each is the maturity date printed in the note form of the indenture, for example Rite Aid’s promise to pay principal on 15 November 2026. The New Fortress Energy notes had under a year left when the credit event occurred, which is no obstacle: the test has no minimum.
Read the case: Rite Aid Corporation 2023 →Read the case: Dean Foods Company 2019 →Read the case: New Fortress Energy 2025 →
Common questions
- Is Maximum Maturity measured from the issue date?
- No. It tests remaining maturity, measured from the Delivery Date, not the tenor at issue. A bond issued with a 40-year term can pass once fewer than 30 years remain.
- Can a bond be too short-dated to deliver?
- Not under Maximum Maturity, which only sets an upper limit. A bond with a few months left, like the New Fortress Energy notes, passes this characteristic; the other characteristics still have to be met.
- Does the Maximum Maturity limit apply after a Restructuring credit event?
- Maximum Maturity applies as a characteristic whatever the credit event. After a Restructuring, where Modified Restructuring or Modified Modified Restructuring applies, separate maturity limitations can narrow deliverable obligations further. This guide does not cover those.
This guide paraphrases CDSBench’s reading of the 2014 ISDA Credit Derivatives Definitions. The Definitions, the transaction’s confirmation and any Credit Derivatives Determinations Committee resolution govern. Decision support, not legal advice or a Credit Event determination.