Perpetual bond is a fixed income security that has no maturity date. It is also known as ‘consol bond’ and it yields a steady stream of interest payments. However, a major drawback of perpetual bonds is that they are non-redeemable. SEBI had recently directed mutual funds to value such perpetual bonds as 100-year instruments from April onwards. This directive could lead to spike in bond yields and a crash in bond prices according to the investors.
Topics: Perpetual bond
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