What is a Console Bond or Perpetual Bond or War Bond?

 

In simple words, a bond is a written document that gives a fixed return for a certain period to the buyer. When the investor buys a bond, the investor agrees to lend his money to a company or government for a fixed period at a fixed interest rate. In return, that company promises to give you a fixed return every year. When a bond is issued by a private company, it is called Corporate Bonds. This type of bond gives higher returns but the risk is also higher. On the other hand, if a bond is issued by a government, it is called Government Bonds and the returns on these bonds are less but the security is higher.

 

The bond issuing is returned to the principal amount of the ordinary bond for the period it is purchased as well as the fixed return for a fixed period. But a Perpetual Bond is a different type of bond, it has no maturity period, plus the institution that issues the bond does not return the principal amount even after the maturity period is completed. But if the bond issuer wishes to buy the bond back. If the issuer of the perpetual bond does not buy back this bond, then the bondholder will always get the fixed return on this bond. It is also a kind of equity bond because you get shares in equity as long as you keep the shares with you.

 

Perpetual bonds cannot be redeemed as per the wishes of the investor. Yes, it can be redeemed if the issuer wishes. Conversely, if you sell it to someone else, you can get the principal amount. Thus the biggest advantage of Perpetual Bond is that it will continue to give its buyer a fixed interest or return for a very long time or for eternity.

 

In fact, during the First World War, the British Government issued Perpetual Bonds in 1917 to bear the cost of war, on which interest is still being paid at the rate of 5%. However, the British government has bought back 10% of this perpetual bond. Similar Perpetual Bonds were issued by the British Government during the South Sea Bubble of 1720. In fact, at this time the war was going on between France and Britain and due to the money crisis, the British government borrowed a few million pounds from a company called South Sea and issued it to Perpetual Bonds and Monopoly to do business in South America. Had also given this bond has been going on till now and the British Government is still paying interest.