Perpetual bond - Financial definition
Financial acronyms
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Concise definition of the term perpetual bond
Perpetual bonds are fixed income securities which are not redeemable, i.e. they do not have a maturity date.
Comprehensive definition of the term perpetual bond
The absence of a maturity date makes perpetual bonds similar to equity. A couple of notable differences exists, however:
- The payment of the coupon for a fixed-income security is mandatory, the payment of dividend for equity is discretionary.
- Perpetual bonds, like all fixed income securities, do not bear voting rights.
Perpetual bonds are not a very common form of bonds. Two of the most notable perpetual bonds in existence have been redeemed as recently as 2015 by the UK government. They had both been issued by the British Treasury, one, the so-called 4% consols for the financing of World War 1, and the other one for a government bailout from the so-called South Sea Bubble of 1720.