PERPETUALS Meaning and
Definition
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Perpetuals refer to financial instruments or securities that have no fixed maturity date or have an extremely long time horizon. They are also known as perpetual bonds or perpetuities.
Perpetuals are characterized by the absence of a specific repayment date, meaning that the issuer of the security is not obligated to repay the principal amount to the investor at any predetermined point. Instead, the issuer is required to pay regular interest or coupon payments to the investor for an indefinite period until the security is called or redeemed by the issuer.
These types of securities are generally attractive to investors who are looking for a steady stream of income over an extended period. The interest payments from perpetuals are often fixed, providing a stable income source even during periods of market volatility.
Perpetuals are commonly issued by governments, corporations, and other entities to finance their long-term capital requirements. The interest rates on perpetuals are typically higher than those on regular bonds due to the absence of a maturity date. However, issuers often have the option to redeem or call the perpetual at predetermined intervals, providing them with the flexibility to adjust their debt structure in response to changing market conditions.
It is important for investors to consider the creditworthiness and financial health of the issuer before investing in perpetuals, as the absence of a maturity date makes it crucial for the issuer to maintain a reliable source of income to meet the interest payments indefinitely.
Common Misspellings for PERPETUALS
Etymology of PERPETUALS
The word "perpetuals" is derived from the Latin word "perpetuus", meaning "continuous" or "unceasing". The term has been adapted into English to refer to things that are ongoing, constant, or never-ending.
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