What Does Tenor Mean?

Tenor refers to the amount of time reflected in days, months or years which has left from a contract’s or a loan’s repayment period. The concept may also refer to the initial repayment period of a loan.

Tenor may be used in the sense of ‘maturity’ as well. However, it is very rare to refer to tenor in the context of fixed-income products. So government or corporate bonds rather have a maturity date then a tenor. On the other hand, non-standardized policies such as bank loans or insurance contracts are characterized most of the times by having a tenor.

Tenor Explained

In order for one to understand what tenor means, they may think of a bank loan with an initial repayment period of 6 years. This means that the initial tenor of this loan is 6 years. However, after 4 years, the tenor will be only 2 years, as six minus four is two.