Most bonds mature eventually and are redeemed after periods of months, years, or even decades. And then there are so-called perpetual bonds.
These bonds have no maturity date and just keep paying interest to the holder forever. On Tuesday, the owner of a perpetual bond that was issued 400 years ago received a payment at a ceremony attended by the Financial Times.
On Dec. 10, 1624, a Dutch water authority called Hoogheemraadschap Lekdijk Bovendams sold a bond for 1,200 Carolus guilders to a woman in Amsterdam, promising to pay 2.5% interest in perpetuity.
It was part of an effort to raise money for repairs on a dike that was damaged earlier that year. In all, the water authority amassed 23,000 Carolus guilders after selling more than 50 bonds.
The bond somehow survived numerous 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 an auction, then donated it to the New York Stock Exchange in 1938 as a sign of friendship, the FT said, in recognition of New York City’s Dutch background.
Meanwhile, the bond’s original issuer isn’t around anymore, but has a modern descendant in the form of Hoogheemraadschap De Stichtse Rijnlanden.
Similarly, guilders have since given way to euros, and the bond’s interest payment now comes out to 13.61 euros a year, according to the FT.
The NYSE hadn’t collected any interest since 2004, so Tuesday’s payment ceremony in the Netherlands saw it receive 299.42 British pounds, which were then donated to a local dike museum, the report said.
Today, global financial markets are flooded with debt, including sovereign bonds, municipal bonds and corporate bonds.
U.S. debt has been a growing source of concern as Wall Street and policymakers sound the alarm on its trajectory as well as the government’s ability to sustain it.
After the Federal Reserve embarked on the most aggressive rate-hiking campaign in more than 40 years, yields in the U.S. and elsewhere have jumped, meaning annual payments are up too.
The federal government now spends $1 trillion a year to keep up with interest on its debt as rates—and deficits—have soared recently.
On Monday, bond giant Pimco said it was reducing its exposure to long-term Treasuries, citing the U.S. debt burden.
“The U.S. remains in a unique position because the dollar is the global reserve currency and Treasuries are the global reserve asset,” it said in a note. “But at some point, if you borrow too much, lenders may question your ability to pay it all back. It doesn’t take a vigilante to point that out.”
This story was originally featured on Fortune.com
