Perpetual bond

Perpetual bond, which is also known as a perpetual or just a perp, is a bond with no maturity date.[1] 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.

Perpetual bonds vs. equity

Examples

Pricing

Perpetual bonds are valued using the formula:

where:

References

External links

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