The world's oldest bond, issued in 1648 by the Hoogheemraadschap Lekdijk Bovendams in the Netherlands to fund repairs to flood defences on the Lek River, still pays interest 375 years after its issuance. The bond is owned today by Yale University, which purchased it in 2003 for its history of finance archive.
The oldest example of a perpetual bond was issued on 15 May 1624 by the Dutch water board of Lekdijk Bovendams. Only about five such bonds from the Dutch Golden Age are known to survive today.
The oldest bond that is still paying interest is one issued in 1624 by the Hoogheemraadschap Lekdijk Bovendams (NLD) to fund repairs to flood defences on the Lek river, south of Utrecht. The holder is entitled to annual interest payments of 2.5% of the principal (which was 1,200 Dutch guilders).
Long bonds offer a maturity date far out on the investment horizon. For the U.S. Treasury market, this includes the 30-year Treasury which has the longest maturity of all offerings. Corporate bonds, however, can issue maturities in different variations. Corporate bonds may offer maturities of 15, 20, or 25 years.
Perpetual bonds, also known as perps or consol bonds, are bonds with no maturity date. Although perpetual bonds are not redeemable, they pay a steady stream of interest in forever.
There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall.
Similar to government bonds, corporate bonds are exposed to interest rate risk. In addition, corporate bonds also have credit or default risk - the risk that the borrower fails to repay the loan and defaults on its obligation.
The bond market is a wide field, with many different categories of assets. In general, you can expect a return of between 4% and 5% if you invest in this market, but it will range based on what you purchase and how long you hold those assets.
WONG: As we heard earlier, the New York Stock Exchange got the oldest one, that one from 1624. Pete Asch is the chief historian of the New York Stock Exchange, and he says the bond was a gift from the Amsterdam Stock Exchange.
The Kuwait Investment Authority (KIA) is the oldest sovereign wealth fund in the world. KIA traces its roots to the Kuwait Investment Board, which was established in 1953, eight years before Kuwait's independence in 1961 In 1982, KIA was created by Law No.
The first modern mutual fund was launched in the U.S. in 1924. The oldest mutual fund still in existence is MFS' Massachusetts Investors Trust (MITTX), also established in 1924. The exchange-traded fund, a modern variation, has taken the market by storm since the Great Recession of 2007–2009.
Only four actors who played James Bond — also known as Agent 007 — in movies are alive today: George Lazenby, Timothy Dalton, Pierce Brosnan and Daniel Craig.
Perpetuals make up only a very small portion of the total bond market. The primary issuers of perpetual bonds are government entities and banks.
When an issuer calls its bonds, it pays investors the call price (usually the face value of the bonds) together with accrued interest to date and, at that point, stops making interest payments. Sometimes a call premium is also paid. Call provisions are often a feature of corporate and municipal bonds.
Despite Treasuries' recent rally, yields remain very compelling, with the US 10-year Treasury now yielding 3.9%. For bond investors, these conditions are nearly ideal. After all, most of a bond's return over time comes from its yield. And falling yields—which we expect in the latter half of 2024—boost bond prices.
Inflation erodes the purchasing power of a bond's fixed interest payments. If inflation rises rapidly, the real return on bonds can become negative, leading to a loss for the investor.
The highest-quality bonds are rated Aaa at Moody's and AAA at S&P and Fitch, with the scales declining from there. Moody's ratings of Baa3 and BBB at S&P and Fitch are considered the lowest investment-grade ratings. Ratings below this are considered high-yield or junk.
Investing in corporate bonds is generally part of a strategy to protect your capital and earn a profit from the interest paid as part of a diversified portfolio of stocks and bonds. You can also make money by investing in bonds trading for a discount to face value (also called par value).
Treasury Bonds
Investors often gravitate toward Treasurys as a safe haven during recessions, as these are considered risk-free instruments. That's because they are backed by the U.S. government, which is deemed able to ensure that the principal and interest are repaid.
Corporate bond investments have posted some of the strongest returns in the fixed income universe so far in 2023, but it might be difficult to replicate that performance next year. Positive total returns seem likely, but excess returns—returns relative to Treasuries—might not be as high.
Most corporate bonds pay on a fixed semiannual schedule. One exception is zero-coupon bonds, which do not pay interest but are sold at a deep discount and then redeemed for full face value at maturity.
The interest you earn on corporate bonds is generally always taxable. Most all interest income earned on municipal bonds is exempt from federal income taxes. When you buy muni bonds issued by the state where you file state taxes, the interest you earn is usually also exempt from state income taxes.