Perpetual Bond

A bond that pays interest forever and never repays its principal.

A perpetual bond (or 'perp') has no maturity date: the issuer pays coupons indefinitely and never returns the principal. Investors value it as pure income; its price is highly sensitive to interest rates since the payments stretch to infinity. The British government's consols, issued from the 18th century and only redeemed in 2015, financed wars including Waterloo. Today perpetuals survive mainly as bank capital instruments, where regulators like debt that never has to be paid back.

The bank issued a perpetual bond paying 7% forever, callable after five years at the issuer's option.