Question

Use the Bond Maturity Dates discussion thread to discuss the advantages of having a maturity date of 50 years or longer.

What companies today offer 50 year bonds? List 3-4 companies and discuss why they offer these and what their specific advantage is with having such a lengthy bond maturity date? Is bankruptcy considered a real threat to those companies that offer 50 year bonds? Why?

Answer 1

The main advantage of having a maturity date of 50 years or longer is that if the bond is held by the investor till its maturity then, the investor will receive guaranteed coupon payments for a long time period i.e. 50 years or longer.

Such 50 year bonds were offered by Walt Disney, Caterpillar and Coca-Cola. The reason for issuing the 50 year bonds by such companies is that they can use the money for a long time period to achieve the goals that require a longer time frame. So, 50 year bonds are suitable for working towards and achieving the goals that the company has for the long term. In addition to this, it helps the company to take advantage of the low interest rate due to the long term and shows the faith and belief of the investors in the company.

Bankruptcy is not a threat to the companies that offer 50 year bonds. The reason for this is that the company has a long time period to pay the investors.