holdtomaturity

Hold-to-maturity (HTM) is a designation for debt securities that an investor commits to holding until their stated maturity. This classification is commonly used for instruments such as government or corporate bonds and is intended for investors seeking predictable, interest-generating cash flows and full repayment of principal at maturity.

Under many accounting frameworks, HTM securities are measured at amortized cost. Interest income is recognized using the effective interest rate method, and the carrying amount is adjusted for principal repayments and the amortization of any premium or discount. Because the assets are carried at cost rather than fair value, changes in market prices do not generally affect earnings while the securities remain classified as HTM. Impairment is recognized if the decline in value is judged to be other-than-temporary, typically tied to credit deterioration; temporary fair value declines do not immediately impact earnings.

Qualifying for HTM status requires both intent and ability to hold the security to maturity. Because HTM is predicated on holding to maturity, selling significant portions of HTM securities before their stated maturity can jeopardize the classification and may trigger reclassification or other accounting consequences in some frameworks. Changes in circumstances that negate the intent or ability to hold to maturity may necessitate reclassification to another category.

Compared with other debt-securities classifications, HTM aims to reduce earnings volatility by avoiding fair value fluctuations in normal operations. It contrasts with held-for-trading securities, which are measured at fair value with gains and losses recognized in earnings, and with available-for-sale securities, where unrealized gains and losses flow to equity. In IFRS, the concept exists under different terminology, focusing on amortized cost for assets held to collect contractual cash flows.