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Market regulator Securities and Exchange Board of India’s (Sebi’s) new rules around mutual fund (MF) investments in perpetual bonds have kicked up a storm. But what are perpetual bonds, who issues them and why are MFs an important part of the ecosystem? Let’s find out.
What are perpetual bonds?
A typical bond has a fixed tenure of maturity, but perpetual bonds, as the name suggests, can theoretically go on for as long as the issuer is a going concern. In practice, though, these bonds have a “call” option, which enables the issuer to redeem the bond at pre-fixed intervals. The
