The increase in US treasury rates suddenly made bonds that matured at the issuer’s discretion an extremely unattractive prospect, and the enthusiasm that retail and institutional investors across Asia had shown for the slew of perps that followed Pemex’s pioneering $1.75 billion deal in 2004 quickly vanished. Now there are tentative signs that a reconciliation might be at hand.
There was a rush of perpetual bond issuance at the end of 2006: perps have always been attractive products for issuers, which pay only a small premium on the price of a regular bond for the insurance of being able to decide whether or not to call the bond after a set date (usually five or 10 years).
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