A typical bond returns the principal in a single payment at maturity. With amortization, the issuer repays the principal in portions—usually together with each coupon payment.
Key consequence: the coupon accrues on the remaining unpaid principal, so coupon payments decrease in absolute terms over time, even if the rate remains unchanged. For an investor comparing such issues with ordinary ones by coupon size, this creates a distorted picture—yields to maturity should be compared instead.
For the issuer, amortization reduces the burden at maturity by distributing it over time. For the investor, it decreases credit risk since part of the investment is returned earlier, but simultaneously creates reinvestment risk: returned amounts must be reinvested at an unknown rate. In the Uzbek market, amortization structures are more common in corporate and infrastructure issues with long maturities.