What is Seasoning?
Definition of Seasoning
It is a time period of a debt security that has been traded publicly. Seasoning is used to determine the premium that should be charged for the security in the secondary market. If a debt security has been traded for over a year, it is known as seasoned security provided that it has a good payment track record as well.
Explanation of Seasoning
Seasoning is also used to categorize investments that have a standing. The standing of those investments is determined on their history. Investors are usually reluctant to work with those investors who have weak record or nil at all. They like to pay premium for those securities that are safe.