Monday, March 12, 2012

Perpetual bonds: Good or bad?

With interest rates so low these days, one would not be wrong to wonder why are companies and even a REIT issuing perpetual bonds to raise funds with coupons of up to 7%. To a layman like me with very rudimentary understanding of economics, it could be one of two reasons:

1. The business or REIT concerned is not able to get loans because its business is too risky.

2. The amount of liquidity