They will grow up over hundreds of years. Or they won't grow up at all.
At its core, a bond is a promise: I borrow your money today, pay you interest on it regularly, and then return your principal on a certain date, known as the maturity. Not too hard. What if that date that everyone agreed on never comes? What if the borrower agrees to pay interest forever but never has to pay back the capital?
That is a bond that lasts forever. No date of maturity. No final payment. In theory, the coupon payments go on forever, or until the issuer decides to buy the bond back. The cash flows of a perpetual bond are like those of a perpetuity: they are an endless stream of fixed payments whose present value can be calculated by dividing the coupon by the current interest rate. Because their prices are very sensitive to changes in interest rates, perpetuals are interesting creatures for textbooks and dangerous tools for portfolios. The whole price depends on the yield environment because there is no principal repayment that would keep the bond's value at a certain level in the future. When rates go up, perpetuals can drop so quickly that even experienced investors are surprised.
So, the most unusual bonds in the world of fixed income are those that don't have a maturity date. Bonds that last forever. British Consols were the most well-known of them all.
British Consols: Three Hundred Years of Never-Ending Debt
Consols, which stands for Consolidated Annuities, were first used in 1751 when Sir Henry Pelham, the Chancellor of the Exchequer, turned all of the government's redeemable stock into one bond called the Consolidated 3.5% Annuity. The goal was simple but elegant: to lower the government's debt coupon by combining the messy mix of wartime loans, lotteries, and life annuities into one neat instrument. The interest rate on the stock was lowered to 3% in 1757, and it became the Consolidated 3% Annuity.
Why always? The logic came from a need. Before consols, the British government got money from annuities that the buyer paid for the rest of their life. Of course, lenders took advantage of the system by putting children forward as annuitants to get the most interest payments. A ten-year-old bought annuities, but an eighty-year-old man did not. Instead of trying to keep track of every annuitant's heartbeat, the government created perpetuities that paid interest forever, which got rid of the actuarial headache.
For more than 130 years, the coupon stayed at 3%. In 1888, Chancellor George Joachim Goschen turned the 3% consols and lower annuities into a new 2.75% instrument. In 1903, the rate was lowered again to 2.5%, and the first redemption date was set for April 5, 1923. Chancellor Winston Churchill issued a new government stock, the 4% Consols, in 1927 to help pay off some of the National War Bonds that had been issued during World War I. The government also gave out the 3.5% Conversion Loan and the huge 3.5% War Loan (worth £1,938.6 million) between 1921 and 1932 to pay off a number of debts from World War II.
Consols made up most of Britain's national debt until World War I. Of the £762 million in government debt that was still owed in 1910, £567 million, or about three-quarters of it, was from the 2.5% Consolidated Loan. By 1961, the number had dropped to less than 3% of all debt. After February 1, 1957, you could cash in your 4% consols with three months' notice. The 2.5% consols had a coupon that was so low that they could not be redeemed. No smart government would buy back debt that paid so little when it could borrow money at market rates for anything it needed.
This is about what Britannica used to say, and it was right as far as it went. The story does, however, have an ending. On October 31, 2014, George Osborne, the UK's finance minister, said that the UK would pay off the 4% consols, which were £218 million worth of debt that had been around since Churchill was in power. February 1, 2015, was the day of redemption. The 3.5% and 3% bonds came next, between March and May. Under Section 124 of the Finance Act 2015, the last of the 2.5% consols were redeemed on July 5, 2015. The end of three hundred years of continuous financial history.
When they retired, the UK still had £2.59 billion in undated securities, which was about 0.23% of the government's gilt portfolio. These instruments were first issued between 1853 and 1946, replacing securities that had been around since the 1700s. Their prices had given us a continuous record of British government bond yields from 1729 to 2015, a record that is unlikely to be broken.
Consols were more than just money. They were an important part of British culture. The characters in Jane Austen's books measured their wealth in terms of how much money they made from their jobs. Dickens talked about them. In Howards End, E.M. Forster used them as a plot device. For generations, they were the standard for financial safety and the foundation on which the City of London built its global power. In a way, their disappearance marked the end of a very long chapter in the history of sovereign finance.
A note about predecessors: Consols weren't the oldest bonds that last forever. The Dutch water board of Lekdijk Bovendams issued a bond on May 15, 1624, that is different from all the others. There are only about five of these bonds from the Dutch Golden Age that are still around. Yale University bought one at auction in 2003. It was made in 1648. Since 1977, no interest had been paid on it. Geert Rouwenhorst, a professor at Yale, went to the Netherlands in person to get the payments that were late. The most recent interest payment was made in 2015 on a bond that is almost 400 years old.
Century Bonds: Just a Step Below Forever
Bonds that last a lifetime and longer. The bonds of the century are one step below perpetuals on the scale of ambition. They do have a maturity date, but it's so far in the future that it tests the limits of institutional memory, national survival, and human mortality.
Austria was the first country in the eurozone to reach the true century. It sold €3.5 billion worth of bonds in September 2017 that will mature in 2117 and pay a 2.1% coupon. The problem was then raised six times, bringing the total to €6 billion. Then the pandemic hit. Austria issued a second 100-year bond in 2020, the 0.85% of 2120, taking advantage of the insatiable demand for bonds during a time of very low rates. This bond has been tapped a remarkable 15 times, bringing the total amount of debt to €4.6 billion. The Japan Government Pension Investment Fund, Vanguard, and BlackRock all said they owned the world's largest pension fund.
The way these instruments' prices have changed has been a great lesson in duration risk. Duration, in a general sense, tells you how much a bond's price will change when interest rates change. The longer the bond lasts, the more violent the price swings will be. From 2021 on, when global rates went up by 300 to 500 basis points, the value of the Austrian century bond, which matures in 2120, dropped by 55% from its late-2020 peak. A sovereign bond with an AA+ rating that lost more than half of its market value, not because of default or a political crisis, but just because of changes in interest rates. One analyst said that this was not a meme stock or a tech stock that was doing well; it was a government bond with one of the best credit ratings available.
Belgium and Ireland have since joined the 100-year club, but they are much smaller. Italy, France, and Poland have not gone past 50 years.
Mexico was the first of the new markets to open. It sold $1 billion in century bonds in 2010. The bonds had a 5.75% interest rate and would mature in 2110. In 2015, it followed up with the first euro-denominated 100-year government bond in the world. It was worth €1.5 billion and had a yield of 4.2%, maturing in 2115. The timing was amazing: Switzerland sold 10-year bonds with negative yields on the same day. Two big events happened on the same Wednesday: one country paid investors to hold its debt, and another country borrowed money that it promised to pay back in a hundred years.
Argentina joined in June 2017, and the reception was just as colorful as you would expect in a country known for tango. President Mauricio Macri's government sold 100-year bonds worth $2.75 billion in dollars, with a coupon rate of 7.125% and an effective yield of 7.917%. There were way too many orders for the deal—almost $10 billion came in from investors looking for high returns during a time of low interest rates.
There was so much irony that it could cut. Since gaining independence in 1816, Argentina has failed to pay its sovereign debt eight times: in 1951, 1956, 1982, 1989, 2001, and again in 2014, when it did so in a "selective default." At the time, the 2001 collapse was the biggest sovereign default in history. The country couldn't pay back $80 billion (some sources say $132 billion) in dollar-denominated debt. At the time the century bond was issued, one investment executive said it was hard to find a 20-year period when Argentina hadn't defaulted.
Many Argentines, who still remember the 2001 bankruptcy, posted on social media with a mix of disbelief and dark humor. Someone asked if Argentina would still be around in 100 years. Another person said the line that went around the world: "At least there will be cockroaches to pay off the debt." Axel Kicillof, who used to be Cristina Fernández de Kirchner's finance minister, said that Macri put dollar debt on the backs of ten generations of Argentines. The saying went, "Nothing bad can last for 100 years."
Good bet. But it didn't last long. In less than a year, runaway inflation, a falling peso, and a rush back to the IMF had all hurt the bonds. By August 2019, after Macri lost a primary election to the populist opposition, the century bonds fell to about 45 cents on the dollar. The implied chance of default over five years was 84%. The first country with a junk rating to sell a century bond had, as expected, reminded the world why it was rated junk.
Corporate Immortality: Sleeping Beauties and Big Oil Companies
Yes, but what about corporate perpetual bonds? And what about corporate century bonds? They do exist, but they are rare, and the fact that they are issued often says as much about the issuer as it does about the market.
The most famous case is that of Walt Disney. The company sold $300 million in senior debentures, or bonds, in July 1993. These bonds will mature on July 15, 2093, exactly 100 years after they were issued. The coupon was 7.55%, paid every six months, and the bonds were worth par, which was 0.95% (95 basis points) more than the 30-year Treasury. The bonds were callable after 30 years, which meant that Disney could pay them back in full or in part after July 15, 2023, at a price of 103.02% of their face value. According to reports, the idea came from an institutional investor who went to Morgan Stanley and asked for a 100-year corporate bond to make their portfolio last longer. Disney doubled the amount of money they were going to spend, from $150 million to $300 million, because there was so much demand.
They were quickly given the name "Sleeping Beauty Bonds" on Wall Street, after the fairy tale princess who slept in a magic castle for 100 years while under a spell. The metaphor was too good to pass up: the capital would sleep for a hundred years before the kiss of maturity woke it up. People had different reactions. Alan Greenspan, who was then the head of the Federal Reserve, said that the bonds were a strong sign that long-term inflation expectations were going down. Some people were not as happy. William Gross, who works for Pacific Investment Management Company, said they were crazy. Another analyst told investors to look at what happened to Coney Island over the course of 50 years to see what happens to amusement parks.
Disney wasn't even the worst case. Coca-Cola also issued 100-year bonds that same week. Because they didn't have a call provision, the company had to pay about 7.5% for the whole century. Ford, Norfolk Southern, and even JC Penney, which sold $500 million in 100-year bonds in 1997, were other issuers of century bonds in the 1990s. In 2020, JC Penney went bankrupt. Standard & Poor's rated those bonds A when they were issued, but by 2019 they had already been downgraded to junk status and were trading at about 20 cents on the dollar. The Canadian Pacific Corporation, on the other hand, has the longest-lasting corporate debt on record. They were still paying 4% on a 1,000-year bond issued by the Toronto Grey and Bruce Railway in 1883, which was due to be paid back in 2883.
Hello, 2093. It's already here, or close enough that a quarter of the 21st century has already passed and Disney's call date was in 2023.
Petrobras, Brazil's state-controlled oil company, also issued ultra-long-dated bonds with terms that went as far as 2044 and beyond at coupons between 6.75% and 7.25%. The timing was bad because Petrobras was also in the middle of the Lava Jato (Car Wash) corruption scandal, which was one of the biggest in Latin American history and revealed billions of dollars in bribes and political kickbacks. In late 2015, the company's credit rating dropped to junk status, and its bonds traded at huge discounts. This is a clear example of how quickly the promise of decades of coupon payments can clash with the realities of politics and business.
The 22nd Century Begins for Alphabet
Alphabet, the parent company of Google, is now spreading its wings into the 22nd century. Alphabet did one of the most amazing corporate bond offerings in history because they wanted to make money and take risks, or rather, because the AI arms race required so much money.
Alphabet set the price for a $20 billion seven-tranche dollar offering on February 9, 2026. This was up from $15 billion after getting more than $100 billion in orders, which is one of the largest order books ever for a corporate bond. The longest dollar tranche was a 40-year bond that would mature in 2066 and was only 95 basis points more expensive than Treasuries. But the main attraction was a 100-year bond worth sterling, which was the first century bond issued by a tech company since Motorola did so in 1997. More issuances in Swiss francs came next, bringing the total amount raised in less than 48 hours to about $32 billion in multiple currencies.
The century bond had a subscription ratio of 9.5 to 1. The vast majority of demand came from UK pension funds and insurance companies looking for assets that would last for 50 years or more to cover their liabilities. Alphabet became a member of a very small group of issuers of sterling century bonds, which includes the University of Oxford, the Wellcome Trust, EDF Energy, and the Mexican government.
The goal was clear: to pay for Alphabet's $185 billion AI capital expenditure plan for 2026, which was about twice as much as the previous year's spending. This plan included data centers, servers, GPUs, and the huge physical infrastructure of AI. The company had $126 billion in cash, but it still had to borrow money because that much cash wasn't enough to pay for the buildout. Alphabet's long-term debt had already grown to $46.5 billion by 2025, four times what it was before.
The market is treating Alphabet like a kind of sovereign credit. Investment-grade corporate spreads usually trade 80 to 120 basis points higher than Treasuries with 40-year maturities; Alphabet's 95 basis points is the lowest rate for issuers that aren't governments. Analysts said that when a tech company can pay for a century of operations at spreads close to government levels, it means either that the company has very good credit or that the risk is being mispriced. Only time will tell which is true.
We are going in a different direction here. AI is a new kind of sweetener. No one can say if Alphabet will still be doing well three generations from now, since the industry changes a lot every ten years. When IBM issued its own century bond in 1996, it was the biggest company in the world. But within a few years, new companies like Microsoft and Apple had changed the way businesses compete. Motorola was the last tech company to issue century debt in 1997. At the time, it was one of the top 25 companies by market capitalization and the top corporate brand in the US. It is the 232nd largest company by market cap today, and it makes $11 billion a year. Names like JC Penney, Ford, and Coca-Cola are in the century bond graveyard. They seemed like they would last forever when they were issued.
But it's important to say the obvious: the market is betting that Google is more than just a tech company. More and more, investors see hyperscalers as long-term infrastructure platforms, like utilities or government agencies, rather than tech companies that are sensitive to cycles. In this view, the century bond is a sign that Alphabet is in a category that is not typical for businesses.
Big Tech as Big States and Lenders
This is the bigger change in structure. Big Tech companies are becoming super-states and lenders, which means that their financial operations, capital deployment, and debt issuance are as big or bigger than those of mid-sized sovereign nations.
The numbers are mind-boggling. In 2025, the five biggest hyperscalers, Amazon, Alphabet, Microsoft, Meta, and Oracle, issued about $121 billion in bonds. That's more than four times the five-year average of $28 billion. Morgan Stanley thinks that hyperscaler borrowing could reach $250 billion to $300 billion in just 2026. JPMorgan thinks that over the next five years, there will be about $300 billion in AI- and data-center-related debt deals each year. To pay for the building of AI infrastructure, the technology sector may need to borrow up to $1.5 trillion, which is more than most countries borrow in a year.
Projected capital spending by hyperscalers in 2026 will be more than $600 billion, which is a 36% increase over 2025. About 75% of that amount, or $450 billion, will go toward AI infrastructure, such as servers, GPUs, and the data centers that house them. These capital expenditures are now more than the companies' combined free cash flow, which means they need to borrow money from outside sources on an unprecedented scale. In 2025, spending on tech equipment and software made up 4.4% of US GDP, which was close to the highest levels seen during the dot-com bubble.
It's clear that there are many similarities to the telecom and fiber-optic buildout of the 1990s, and the differences are helpful. Unlike the dot-com startups that lost money on risky projects, today's hyperscalers are in charge of very profitable businesses that already exist. In 2025, Alphabet made more than $400 billion in sales. By 2026, the top five hyperscalers are expected to have an operating cash flow of $577 billion. Their total liabilities to assets ratio is about 48%, while the S&P 500's is almost 80%. In theory, most people could pay off all of their debts in less than a year of operating income.
But not all of them are the same. Oracle, the company with the most debt, would need 7.4 years of operating income to pay it off, which is much longer than what is usually required for investment-grade companies. Its credit default swap spreads have gone up a lot, and experts have said that if things keep going the way they are, the company could run out of money by the end of 2026. Oracle is a warning for the larger AI lending boom: it shows that even when there seems to be an endless demand for tech debt, the market still makes choices, and leverage still costs money.
The change is very big. These businesses don't just sell goods or services anymore. They borrow money like governments, invest money like sovereign wealth funds, and build infrastructure on a national level. The $3 trillion AI data center buildout that is planned for the next few years is being paid for by a wide range of debt markets, including investment-grade bonds, leveraged finance, convertible bonds, commercial mortgage-backed securities, and asset-backed securitization. BlackRock, Global Infrastructure Partners, Microsoft, and Abu Dhabi's MGX have started a joint AI Infrastructure Partnership. The first big project for this group will be the $40 billion purchase of Aligned Data Centers in 2025, which will be the biggest data center deal ever.
When Alphabet sells a 100-year bond and the market treats it like government debt, the way global finance works has changed in a big way. It's no longer a question of whether Big Tech companies are too big. The issue is whether they have become too important and too deeply ingrained in the global economy's financial plumbing to be meaningfully separated from the states that used to control them.
At least the cockroaches will still be there to see how it all ends.