Perpetual securities Definition & Example
Perpetual securities are securities, which have received the greatest distribution in the stock market and there are in traditionally documentary "paper" form. Such securities may exist or forever, or until the maturity of the issue of securities date has not marked. To such securities, for example, can be attributed, some of the demand and state bonds.
Interest on the perpetual securities pay eternally, but the original borrowed amount will never pay. The securities may be called indefinite duration, if the borrower has the right but not the obligation for redemption of these securities is such an example can serve as a British console.
Securities without specifying a date on their redemption - (redemption date).
Perpetual securities
Developing stock market began to affect the transition of many types of securities to the non-documentary form of existence - first of all equity.
This was the reason that even the perpetual securities to be made in non-documentary form, they are fixed in the form of a register of the owners. Thus, the system simplifies the control over the turnover of the securities, in the first place to the bearer.
An example of perpetual securities
In countries with advanced economies, perpetuity bond are quite standard tool. As the issuers of the act and the government, and the big corporations.In 1996, the company IBM has released a 100-year bonds for a total of $850 million dollars and became the 21-th company issuing such bonds. The coupon rate of the bonds was accounted for 7.22%. In contrast to the yield of 30-year Treasury obligations of the government, this rate by 80 percentage points higher. To the issuers to issue 100-year bonds are such well-known companies as «Coca Cola», «Walt Disney», etc.
On the opened market, prices of perpetual securities with fixed interest rate of change in the direction to the reverse movement of the interest rate.
