Lesson From A 1650 Dutch Vintage Bond

The past few years have a spike in the issuance of longer-dated bonds maturing ever further into the future. According to JPMorgan, the proportion of new issuance with maturities longer than ten years is the highest since 2007.

Demand for longer dated date allowed Petrobras, France’s EDF and Mexico to all issue 100-year “century bonds” extending the boundaries of corporate bond markets.

Century bonds

Many have questioned the appropriateness of these bonds. After all, who knows what the world will be like 100 years from now (not to mention the fact that, on average, Mexico defaults once every 47 years). There’s also a risk that investors who bought these century bonds could just forget that they ever bought them in the first place, which...