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The 100 Year
Article

The 100 Year

A Take on the Century Bond

GMO, 2017

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Editorial Rating

8

Qualities

  • Analytical
  • Innovative
  • Overview

Recommendation

Murmurs from US policy leaders are growing louder about the possibility of issuing a 100-year Treasury bond to take advantage of low interest rates and to extend the maturity dates of US debt. The 30-year bond currently occupies the furthest end of the yield curve, but the addition of a century note could provide financial flexibility for current and future administrations. Investment expert Amar Reganti analyzes a 100-year bond from the perspective of both the issuer and the investor. Though it never offers investment advice, getAbstract recommends this detailed analysis to finance professionals and investors interested in the nuances of a century-long debt and investment instrument.

Take-Aways

  • Several countries, corporations and nonprofits have taken advantage of low interest rates to issue notes with maturities of up to 100 years.
  • Issuers and investors perceive the 100-year bond from vastly different viewpoints.
  • An issuer may want to lock in an optimal funding rate, extend the maturity of its debt portfolio or tap the demand of investors looking for future income streams.

About the Author

Amar Reganti is a member of the asset allocation team at GMO, an investment firm.