The investors spend their money in bonds, are willing to invest money in almost anything you offer them market. In this situation, bankers are willing to undergo a test that claim – through the issuance of bonds maturing in 100 years, says the Wall Street Journal. Bonds with longer period as is considered very exotic, they may be issued only by the most powerful companies in the world – those that can be expected that the next century will be on the market. Hundred bonds were in fashion in the mid 90’s and the beginning of the century, when several companies were able to put such issues. Most of them were released in 1993, 1996 and 1997. This type of instruments are used quite rarely, because the issue should be offered a serious premium over 30-year bonds. The current record low historical interest rates lure companies to issue long-term debt. The reason for this is that companies can borrow cheap loans from banks and do not have to pay higher interest on bond issues. If issued, 100-year bonds will pay principal prior to 2110 – the year in which in all likelihood, today’s investors will be among the living. The main risk in these securities is that interest rates can jump so as to reset the bond face value. In view of market developments over the past decades, so it’s not sounds amazing. That is the reason for the skepticism, which sees the desire to place such term bonds.
“I think it would be a challenge,” said Marc Olin, head of corporate finance division in the United States of Fitch Ratings. “Given the volatility of world markets credit risk of 100-year bonds and expectations that at a time interest rates will probably increase will probably drive away investors,” he said. This did not stop some bankers insist that they must be placed with such financial instruments. They point out that currently the situation is excellent for the issuance of 100-year bonds of companies with high reputation. Among companies which have so far allowed the issuance of its 100-year debt, are Coca-Cola Enterprises, Anadarko Petroleum, Apache, Burlington Northern Santa Fe, Walt Disney, Ford, IBM and others. For most bonds coupon payment is between 7 and 8 per cent.