Cambridge Business Association
The 100 Year
Article

The 100 Year

A Take on the Century Bond

Amar Reganti
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.

Summary

A 50-year or 100-year bond issuance by nations or corporations is not a first-of-its-kind event. Several countries, including Belgium, Ireland, Mexico and the United Kingdom, have taken advantage of low interest rates to issue “ultralongs.” Corporations such as Coca-Cola, Disney and Petrobras have also used this type of funding. The United States is considering issuing a 100-year Treasury bond to extend the government’s debt maturity profile. But it wouldn’t be the first time America looked so far into the future for its financing: In 1900, it issued a perpetual bond...

About the Author

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

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