Perpetual bond, which is also known as a Perpetual or just a Perp, is a bond with no maturity date. Therefore, it may be treated as equity, not as debt. Issuers pay coupons on Perpetual bonds forever, and they do not have to redeem the principal. Perpetual bond cash flows are, therefore, those of a perpetuity.
Examples of perpetual bonds are consols issued by the UK Government. Most perpetual bonds issued nowadays are deeply subordinated bonds issued by banks. The bonds are counted as Tier 1 capital, and help the banks fulfil their capital requirements. Most of these bonds are callable, but the first call date is never less than five years from the date of issue—a call protection period.
Read more about Perpetual Bond: Pricing
Famous quotes containing the words perpetual and/or bond:
“Constancy in love is a perpetual inconstancy which fixes our hearts successively to all the qualities of the person loved—sometimes admiring one and sometimes another above all the rest—so that this constancy roves as far as it can, and is no better than inconstancy, confined within the compass of one person.”
—François, Duc De La Rochefoucauld (1613–1680)
“The ideal of men and women sharing equally in parenting and working is a vision still. What would it be like if women and men were less different from each other, if our worlds were not so foreign? A male friend who shares daily parenting told me that he knows at his very core what his wife’s loving for their daughter feels like, and that this knowing creates a stronger bond between them.”
—Anonymous Mother. Ourselves and Our Children, by Boston Women’s Health Book Collective, ch. 6 (1978)