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Non-Tech : Kirk's Market Thoughts

COHR 178.06

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Jan 9 9:30 AM EST

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kimberley

the traveler

To: robert b furman who wrote (6419)	12/14/2018 10:21:16 PM
From: dospesos	3 Recommendations Read Replies (1) of 27007

Hi Bob: Companies or governments—central or state or local—can issue bonds of various durations partly depending upon their credit ratings. The UK issued perpetual bonds in the 18th century which still exist. Sovereigns. Perpetual corporates are rare these days but not unheard of. GE issued several series of perpetuals in the past decade. On this one you get 5% per year forever but you never get your bond redeemed. It’s sort of like a cash annuity. But if the price of the bond goes down and you buy it in the secondary market, you could have a 7% perpetual in your account. Or way more if the bonds get much lower but the company still survives. Or the issuer could go bankrupt and you end up with nothing. Because of this possibility, the bonds are very closely watched when times are bad for the corporation. They are like the CDS deals in a way. Sooooooo the bond prices are a sort of sentiment measure bet on the the corporation’s survival.

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