Perpetual Bond

A perpetual bond (also called a perp or consol) is a fixed-income instrument with no fixed maturity date—it pays coupon interest indefinitely without ever repaying the principal. The issuer is under no obligation to return the principal, but typically retains the right to call (redeem) the bond after a specified period. In India, perpetual bonds are widely issued by banks in the form of Additional Tier 1 (AT1) bonds as part of their Basel III capital requirements. AT1 bonds made headlines in 2021 when some were written down to zero during a bank restructuring, highlighting the significant risks these instruments carry for investors despite their higher yields.