Undated Issue

AAA

DEFINITION of 'Undated Issue'

A government bond that has no maturity date, and pays interest in perpetuity. While the government can redeem an undated issue if it so chooses, since most existing undated issues have very low coupons, there is little or no incentive for redemption. Undated issues are treated as equity for all practical purposes due to their perpetual nature, and are also known as perpetual bonds.

INVESTOPEDIA EXPLAINS 'Undated Issue'

Perhaps the best-known undated issues are the U.K. Government's undated bonds or gilts, of which there are eight issues in existence, some of which date back to the 19th Century. The largest of these issues presently is the War Loan, with an issue size of £1.9 billion and a coupon rate of 3.5% that was issued in the early 20th century.

RELATED TERMS
  1. Perpetual Bond

    A bond with no maturity date. Perpetual bonds are not redeemable ...
  2. Perpetuity

    A constant stream of identical cash flows with no end. The formula ...
  3. Maturity Date

    The date on which the principal amount of a note, draft, acceptance ...
  4. Gilts

    Bonds that are issued by the British government and generally ...
  5. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
  6. Bond

    A debt investment in which an investor loans money to an entity ...
RELATED FAQS
  1. How is it possible for a rate to be entirely risk-free?

    It is not possible for a rate to be entirely risk-free. The risk-free rate of return is a theoretical construct that underlies ... Read Full Answer >>
  2. How is the risk-free rate of interest used to calculate other types of interest rates ...

    The risk-free rate for bonds is used for pricing the yield spread as the difference between the interest rate on a bond and ... Read Full Answer >>
  3. What is the difference between a repurchase agreement and reverse repurchase agreement?

    A repurchase agreement, or repo, is a form of collateralized lending, while a reverse repurchase agreement, or reverse repo, ... Read Full Answer >>
  4. How is the interest rate on a treasury bond determined?

    The yield of U.S. Treasury securities, including Treasury bonds (T-bonds), depends on three factors: the face value of the ... Read Full Answer >>
  5. Is a treasury bond a good investment for retirement?

    Individuals saving toward retirement use a variety of investments to accumulate funds over time, including stocks, bonds ... Read Full Answer >>
  6. What are the main disadvantages of fixed income securities?

    Fixed-income securities attract investors because they provide guaranteed returns in the form of fixed, regular cash payments. ... Read Full Answer >>
Related Articles
  1. Investing

    The Advantages Of Bonds

    Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment.
  2. Bonds & Fixed Income

    Savings Bonds For Income And Safety

    Bonds offer undeniable benefits to investors, including safety and tax advantages.
  3. Bonds & Fixed Income

    Why Bad Bonds Get Good Ratings

    Credit ratings are not the only tool to rely on when assessing bonds. Find out why they sometimes fall short.
  4. Bonds & Fixed Income

    Convertible Bonds: Pros And Cons For Companies And Investors

    Find out why businesses choose this type of financing and what effect this has on investors.
  5. Home & Auto

    The Bear On Bonds

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  6. Mutual Funds & ETFs

    Pros & Cons Of Bond Funds Vs. Bond ETFs

    Understanding the pros and cons of bond funds and bond ETFs will help you choose the instrument that is best for building your diversified bond portfolio.
  7. Bonds & Fixed Income

    African Sovereign Debt: Risks and Rewards

    African sovereign debt offers high yields and upside — if one has the stomach for the risk.
  8. Economics

    A Risky Maneuver To Jumpstart Japan's Economy

    Japan's government and the Bank of Japan are buying large amounts of government bonds in an effort to spark economic activity, but there are great risks.
  9. Mutual Funds & ETFs

    Is the TLT ETF a Good Bet for the Long Run?

    Is the iShares 20+ Year Treasury Bond ETF (TLT) a good bet for the long run?
  10. Investing Basics

    CDs or Bonds: Which Investment is Better For You

    When choosing between CDs and bonds, investors who seek to maximize their returns but also want a large measure of safety should consider the following:

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center