A perpetual bond is a bond that has no maturity date – so the issuer of the bond pays coupons on the bond forever, but with no obligation to redeem the principal (ie amount borrowed).
What sort of magic is this?
A perpetual bond may sound like the ultimate ‘magic money tree’ – one that goes on bearing fruit forever. As is almost always the case, the truth is more complicated than that, but in this case, it’s no less intriguing.
In this blog I will introduce you to the perpetual bonds that I’ve owned my entire life. I consider whether buying perpetual bonds are a good investment and discuss whether modern governments should begin selling them in a similar spirit to the wartime bonds of old.