Perpetual bonds are hybrid debt instruments that possess similarities with bonds and equity. The key feature of a perpetual bond is that there is no maturity date. The benefit of issuing a perpetual bond for a company is that it lowers their debt leverage. For an investor, it often offers a higher yield than other forms of debt on the market.
Key learning objectives:
Define a perpetual bond
Explain the purpose of a perpetual bond
What are the benefits on behalf of the issuer, and the investor?
Identify the risk of investing in a perpetual bond
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