Question

Bonds are issued with a variety of maturities, but the typical maturity is between 10 and 30 years. Nevertheless, there are companies, like Coca Cola (KO) and Disney (DIS), that have issued a 100-year bond. If whoever bought Disney's bonds when there were issued and held them until maturity, they would get the YTM if they held the bond until maturity. So, Why do companies issue 100-year bonds? And why there are investors who buy them?

Answer 1

Why do companies issue them?

Companies issue 100 year bonds because there is a market demand, & goal of any business is to profit from the demand.

Why do investors buy them?

The reason varies for different investors.

Some individual investors buy 100-year bonds because they don't expect to really wait 100 years as many of these bonds contain an option which lets the issuer repay the debt partially or fully long before scheduled maturity. Other individual investors buy them for long-term estate-planning so as to pass on wealth safely to future generations-children, grandchildren, & even generations beyond.

Some Institutional investors might use 100-year bonds to lengthen portfolio's duration. Other Institutional investors use these bonds to fulfill other duration goals- e.g., pension funds & insurance companies, for which committing money for 100 years makes a lot of financial sense. For these investors, they have obligations which may not come due for at least 50 years , 100 year bonds are sometimes the only choice to lock in fixed return throughout the period.