Comment by stjeanluc

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stjeanluc
January 17th, 2014 at 8:36 am

I am thinking of a 100 year mortgage…

http://qz.com/167872/nobody-who-bought-these-french-bonds-is-likely-to-live-long-enough-to-see-them-repaid/

Looking back, a bond issue this week may have marked the high-water mark for the corporate bond boom. French utility EDF raised $700 million with a rare 100-year bond, the largest-ever issued by a European company, that will pay investors an annual coupon of 6% from now until 2114.

Over the past year, companies have tapped bond markets with gusto, raising a record amount of debt funding in the rush to lock in low interest rates. Now that interest rates are starting to creep up, bond issuance has slowed from its previous breakneck pace. It also doesn’t help that prominent investors are arguing that corporate bonds are “at their most overvalued level ever.”

It takes a lot of confidence to believe that a borrower will continue paying interest for 100 years. But the attraction of ultra-low interest rates has spurred a steady drip of century-bond issues in recent years after a long drought. Around $6 billion in 100-year debt has been issued since 2008, double the amount raised in the previous ten years.