{"id":63175,"date":"2025-09-12T13:45:24","date_gmt":"2025-09-12T08:15:24","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=63175"},"modified":"2025-09-12T13:45:24","modified_gmt":"2025-09-12T08:15:24","slug":"perpetual-bonds","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/perpetual-bonds\/","title":{"rendered":"Perpetual Bonds"},"content":{"rendered":"<h2><b>Perpetual Bonds Latest News<\/b><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Indian Renewable Energy Development Agency Ltd (IREDA) recently said it has raised \u20b9453 crore at 7.70% per annum through its second issue of Perpetual Bonds, a step that strengthens its capital base for financing green energy projects.<\/span><\/p>\n<h2><b>About Perpetual Bonds<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It is a<\/span><b> fixed-income security<\/b><span style=\"font-weight: 400;\"> that has <\/span><b>no maturity date<\/b><span style=\"font-weight: 400;\"> and <\/span><b>theoretically pays interest forever.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The perpetual bond means the <\/span><b>issuer<\/b><span style=\"font-weight: 400;\"> is <\/span><b>under no obligation to redeem the principal amount at any point.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Also <\/span><b>known as &#8220;perps&#8221; or &#8220;consol bonds,&#8221;<\/b><span style=\"font-weight: 400;\"> these instruments represent a <\/span><b>permanent source of capital for the issuer.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It represents <\/span><b>one of the purest forms of debt<\/b><span style=\"font-weight: 400;\"> that<\/span><b> closely resembles equity <\/b><span style=\"font-weight: 400;\">in certain aspects.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">With these bonds, <\/span><b>investors do not receive the principal<\/b><span style=\"font-weight: 400;\"> amount back <\/span><b>unless the issuer opts to call the bond.<\/b>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This action <\/span><b>involves returning the principal and discontinuing interest payments <\/b><span style=\"font-weight: 400;\">to bondholders.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This call feature <\/span><b>provides issuer<\/b><span style=\"font-weight: 400;\">s with the <\/span><b>flexibility to refinance if market conditions become favourable.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>Most modern perpetual bonds include call provisions<\/b><span style=\"font-weight: 400;\"> that allow issuers to redeem them after a specified period, typically<\/span><b> 5 to 10 years from issuance.<\/b><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>To compensate for the indefinite tenure and higher risk,<\/b><span style=\"font-weight: 400;\"> perpetual bonds <\/span><b>generally offer higher interest rates.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>If the issuer goes bankrupt, perpetual bondholders<\/b><span style=\"font-weight: 400;\"> get <\/span><b>paid after other creditors <\/b><span style=\"font-weight: 400;\">but <\/span><b>before shareholders,<\/b><span style=\"font-weight: 400;\"> placing them in a<\/span><b> middle priority tier.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Perpetual bonds are <\/span><b>highly sensitive to changes in interest rates<\/b><span style=\"font-weight: 400;\">, which can cause significant fluctuations in their market price.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>In India, banks <\/b><span style=\"font-weight: 400;\">are the<\/span><b> primary entities that issue perpetual bonds<\/b><span style=\"font-weight: 400;\"> to meet their capital requirements.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Even though perpetual bonds do not provide principal repayment to investors, they can be an attractive investment option for individuals aiming to generate a stable income for a long period of time.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b style=\"font-size: inherit;\">From an accounting perspective,<\/b> <b style=\"font-size: inherit;\">perpetual bonds <\/b><span style=\"font-weight: 400;\">often <\/span><b style=\"font-size: inherit;\">receive equity-like treatment on balance sheets, <\/b><span style=\"font-weight: 400;\">making them <\/span><b style=\"font-size: inherit;\">attractive for organisations <\/b><span style=\"font-weight: 400;\">looking <\/span><b style=\"font-size: inherit;\">to strengthen their capital structure without diluting existing shareholders&#8217; ownership.<\/b><\/li>\n<\/ul>\n<p><b>Source<\/b><span style=\"font-weight: 400;\">: <\/span><a href=\"https:\/\/www.thehindu.com\/business\/ireda-raises-453-crore-through-perpetual-bonds\/article70038218.ece\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">TH<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Perpetual Bonds is a fixed-income security that has no maturity date and theoretically pays interest forever. Read more about Perpetual Bonds, Meaning, Examples, Latest News<\/p>\n","protected":false},"author":23,"featured_media":63209,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[2641],"class_list":{"0":"post-63175","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"tag-perpetual-bonds","9":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/63175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=63175"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/63175\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/63209"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=63175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=63175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=63175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}