Most bonds eventually mature and are repaid after a period of months, years or even decades. And then there are the so-called perpetual bonds.
These bonds have no maturity date and continue to pay interest to the holder forever. On Tuesday, the owner of a perpetual bond issued 400 years ago received a payment during a ceremony attended by the Financial times.
On December 10, 1624, a Dutch water board called Hoogheemraadschap Lekdijk Bovendams sold a bond of 1,200 Carolus guilders to a woman in Amsterdam, promising to pay perpetual interest of 2.5%.
It was part of an effort to raise money for repairs to a levee that had been damaged earlier that year. The water board raised a total of 23,000 Carolus guilders from the sale of more than fifty bonds.
The band has somehow survived countless wars, conquests, pandemics, natural disasters and other calamities over the years. Fast forward to the 20th century: a Dutch-American banker acquired the bond at auction and then donated it to the New York Stock Exchange in 1938 as a token of friendship. FT said, in recognition of New York City’s Dutch background.
In the meantime, the original issuer of the bond no longer exists, but has a modern descendant in the form of Hoogheemraadschap De Stichtse Rijnlanden.
In the same way, the guilders have now made way for euros, and the interest on the bond now amounts to 13.61 euros per year, according to the newspaper. FT.
The NYSE had not collected interest since 2004, so at Tuesday’s payment ceremony in the Netherlands it received 299.42 British pounds, which were then donated to a local dike museum, the report said.
Today, global financial markets are awash with debt, including government bonds, municipal bonds and corporate bonds.
U.S. debt has become a growing concern as Wall Street and policymakers sound the alarm about its trajectory and the government’s ability to maintain it.
After the Federal Reserve embarked on its most aggressive interest rate hike campaign in more than four decades, interest rates have risen in the US and elsewhere, meaning annual payments have also risen.
The federal government now spends $1 trillion a year to keep up with interest on its debt, as interest rates – and deficits – have soared recently.
On Monday, bond giant Pimco said it is reducing its exposure to long-term government bonds, citing U.S. debt levels.
“The US remains in a unique position because the dollar is the global reserve currency and government bonds are the global reserve,” the report said. “But at some point, if you borrow too much, lenders may doubt your ability to pay it all back. It doesn’t take a vigilante group to point that out.”
This story originally appeared on Fortune.com
