Business and Personal Finance Dictionary

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• MILLENIUM BOND
  
  Definition: A Bond that matures in 1000 years. Example: Lehman Brothers underwrote a 1000-year issue for Safra Republic Holdings SA. Application: A Millenium Bond reduces the need for refinancing and reinvesting. Pricing: The Safra issue yielded 98 basis points over the 30-year U.S. Treasury bond. Price and yield should be nearly reciprocals. Risk Management: One might hedge them by shorting Safra’s previous 100-year maturity bonds. However, as a practical matter their duration should be close to that of the U.S. Treasury’s Long Bond. Comment: If the British government could issue perpetuities ("consols") to consolidate its debt, then why can’t a corporation issue bonds maturing in 1000 years? Source: "Ratings & Briefs," Financial Trader 4 (11), p. 8.
  
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