In a seemingly endless ultra-low interest rate environment, investors remain desperately in search of yield.
They are finding a sudden rush of perpetual bonds from Asian borrowers, which typically pay a 4% to 5% return, a new sweet spot. These bonds are helping them outperform benchmark indices at a time when credit spreads have compressed significantly in the past 12 months.
Extending the sale of perpetual bonds in dollars, Singapore-based Olam, one of the world's biggest food traders, raised S$300 million from a non-call five-year bond this week, paying a coupon of 5.5%. As of Thursday afternoon, the bond was trading at par.