Duration
By Maria Zarpellon
Italian Translator
When I was a novice financial
translator, a key concept I found
pretty hard to understand when
talking about bonds was duration.
In particular, I tended to mix up the
duration of a bond with its
maturity. I quickly realised that
while these concepts are related,
they actually refer to very different
things. Grasping the difference
between them is crucial for both a
bond investor AND a financial
translator!
indicates the percentage change in
the price of a debt instrument in the
event of a 1% change in key
interest rates.
Translating these terms can be
rather challenging, especially for
junior and non-specialised
translators. This is due not only to
the complexity of the concepts
conveyed by these words, but also
to the fact that those in the know
do not always employ them
consistently (or correctly), thus
making life harder for the
translator.
The term “maturity” should not
normally cause any particular
problem when it has to be
translated. However, translating
this
term
is
not
always
straightforward. In fact, investors
frequently use the term “duration”
when they really mean “maturity”.
This is exactly why a word-for-word
translation approach is rarely a
good idea in our field.
Maturity simply indicates the
expiration date of a debt instrument
or the length of time, expressed in
years, until the principal is paid
back to its holder. The same term is
also commonly referred to as the
time remaining until a debt
instrument matures (if a bond fund
has an average maturity of 3 years,
this means that the average life to
maturity of all the bonds it holds is The terms “duration” and “modified
duration” pose quite a few
3 years).
challenges to translators – senior
The concept of duration, on the ones included – because not all
other hand, is far less intuitive. investors and financial writers use
Technically speaking, it measures these terms to mean the same
the average number of years it thing. For example, it is quite
takes for the price of a bond to be common to see the term “duration”
repaid by its internal cash flows. Put employed to mean “modified
more simply, it is an indicator of the duration”. On top of that, it is
interest rate risk of a bond, and is sometimes difficult to guess
expressed in years. The concept of whether the word “duration” is
duration is strictly related to that of being used with the meaning
modified
d u r a t i o n , w h i c h explained above, or rather as a
synonym for “length of time”. In
these cases, only context and
experience can help the translator
choose the right word (remember
that you can quickly find out
whether the speaker means
“duration” or “modified duration” by
checking if the measure is
expressed in years or as a
percentage change).
In French, the terms “duration” and
“sensibilité” are both used to refer
to the concept of “duration”.
Problematically,
though,
“sensibilité” is also the equivalent
term for “modified duration”. As a
consequence, translating the French
term “sensibilité” can be a
nightmare, especially when the very
same word is used to describe two
different concepts in one text!
The terms provided in the table
here below are those usually
employed by our financial
translators to translate the concepts
discussed in this post, but this does
not mean that no other translations
are possible.
Knowing the equivalent words for
“duration”, “maturity” and “modified
duration” in another language will
not prevent you from making
mistakes. The only way to ensure
an accurate translation of these
terms is to have a
clear
understanding of the
concepts behind
them.
Preferred
term(s)
EN
duration
DE
Duration
FR
duration
IT
duration
NL
duration
SP
duración
Alternative
term(s)
Comments
sensibilité
durée
While it should be reserved for modified duration,
“sensibilité” is also often used to mean duration. If the text
addresses an audience without technical expertise, you
might even consider using a simpler word like “durée”.
[ Related terms and expressions ]
Preferred
term(s)
EN
modified duration
DE
modifizierte Duration
FR
sensibilité
IT
duration modificata
NL
modified duration
SP
duración modificada
EN
maturity
DE
Laufzeit(1)
Fälligkeit(2)
FR
échéance
IT
scadenza
NL
looptijd(1)
vervaldatum(2)
SP
vencimiento
Alternative
term(s)
Comments
duration modifiée
See above.
(1)
When referring to the time span between now
and the maturity date.
(2)
Refers to the date/moment a debt instrument
matures.
maturité
(1)
When referring to the time span between now
and the maturity date.
(2)
Refers to the date/moment a debt instrument
matures.