Perpetual Bonds Singapore: Understanding Bonds With No Fixed Maturity Date
What perpetual bonds are, why Singapore banks and REITs issue them, and the risks investors should weigh before buying.
Last updated: October 2026
A perpetual bond is a debt instrument with no fixed maturity date, paying the holder a regular coupon indefinitely, with the issuer under no contractual obligation to ever repay the principal, though most include a call option allowing early redemption at the issuer’s discretion.
Not financial advice. All figures for educational reference only. Data as at October 2026.
Key Takeaways
- Perpetual bonds have no maturity date and pay coupons indefinitely, distinguishing them from conventional bonds which repay principal on a set date.
- Most perpetual bonds include a ‘call date’ giving the issuer — not the investor — the option to redeem the bond early, typically five to ten years after issuance.
- Singapore banks (under Basel III capital rules) and S-REITs are among the most common issuers of perpetual securities, often labelled Additional Tier 1 (AT1) bonds or perpetual capital securities.
- Perpetual bonds typically offer higher yields than conventional bonds from the same issuer, compensating investors for the added maturity and call uncertainty.
- A key risk distinct from ordinary bonds is coupon deferral — some perpetual bonds allow the issuer to skip coupon payments under specified conditions without being in default.
What Is Perpetual Bonds?
A perpetual bond — sometimes called a “perp” — is a type of fixed-income security that, unlike a conventional bond, never formally matures. The issuer commits to paying the bondholder a fixed or floating coupon on a regular schedule indefinitely, but is not contractually obligated to ever return the original principal amount, at least not on any specified date.
Despite the name, most perpetual bonds issued today are not truly “forever” in practice. The vast majority include a call option, which gives the issuer — not the bondholder — the right to redeem the bond at a specified “call date,” typically five or ten years after issuance, and at subsequent coupon reset dates thereafter. Investors generally price and trade perpetual bonds assuming the issuer will call the bond at the first opportunity, since not doing so usually signals financial stress or carries a reputational cost in the eyes of the market.
Perpetual bonds are commonly used by banks to raise regulatory capital. Under the Basel III international banking framework, banks (including those in Singapore) issue Additional Tier 1 (AT1) perpetual bonds, which qualify as loss-absorbing capital and can be written down or converted to equity if the bank’s capital ratios fall below a specified trigger — a feature that makes them materially riskier than ordinary corporate bonds.
How Does It Work in Singapore?
In Singapore, perpetual bonds are issued by two main categories of entities: local banks (DBS, OCBC, and UOB have all issued AT1 or Tier 2 perpetual capital securities to meet Basel III regulatory capital requirements under the Monetary Authority of Singapore’s banking rules) and S-REITs or REIT-adjacent property groups, which use perpetual securities as a form of hybrid capital that is typically treated as equity rather than debt on the issuer’s balance sheet — helping preserve the REIT’s leverage ratios under MAS’s gearing limit rules for REITs.
Retail access to Singapore-dollar perpetual bonds has historically been limited by high minimum investment sizes (often SGD 250,000 for institutional tranches), though some issuances have been structured with smaller SGD 1,000 or SGD 10,000 denominations specifically to allow retail participation through the Singapore Exchange or via brokers.
| Issuer Type | Typical Purpose | Key Feature |
|---|---|---|
| Singapore banks (DBS, OCBC, UOB) | Basel III regulatory capital | May be written down if capital ratio trigger is breached |
| S-REITs / property groups | Hybrid capital, preserves gearing ratio | Treated as equity on issuer’s balance sheet |
Source: General structure of Basel III AT1 and REIT hybrid capital instruments as applied in Singapore.
Worked Example
Suppose a Singapore bank issues a SGD-denominated perpetual bond with a 4.5% annual coupon and a call date in five years. An investor who buys SGD 10,000 of this bond receives SGD 450 per year in coupon payments. At the five-year mark, if the bank’s refinancing costs are favourable, it is likely to call (redeem) the bond at par and potentially reissue a new perpetual bond at prevailing market rates — returning the investor’s SGD 10,000 principal five years after purchase, even though the bond technically has no maturity date.
If instead the bank chooses not to call the bond — perhaps because market rates have risen and refinancing would be more expensive — the investor continues holding the bond indefinitely, now receiving a coupon that may reset to a new, often higher, rate based on a specified formula, but with no guaranteed date for getting the principal back.
Advantages of Perpetual Bonds
Higher yield than equivalent-tenor conventional bonds. Investors are compensated with a yield premium for the added uncertainty around maturity and coupon deferral risk.
Regular income stream. Like conventional bonds, perpetuals pay scheduled coupons, making them attractive to income-focused investors.
Diversification from equities. Even with equity-like risk features, perpetual bonds behave differently from common stock in many market conditions, offering some portfolio diversification.
Issued by well-established institutions. Major Singapore bank and REIT perpetual issuances tend to come from large, closely regulated entities with established credit profiles.
Call date provides a practical investment horizon. Although technically perpetual, the market convention of pricing to the first call date gives investors a realistic expected holding period.
Risks and Limitations
No guaranteed return of principal. Unlike a conventional bond, there is no contractual maturity date requiring the issuer to repay the principal — only a call option the issuer may or may not exercise.
Coupon deferral risk. Many perpetual bonds, particularly bank AT1 instruments, allow the issuer to skip coupon payments under specified conditions without triggering a default.
Extension risk. If the issuer does not call the bond at the first opportunity, investors may be left holding a lower-yielding instrument for longer than expected, especially if market rates have risen.
Subordination in the capital structure. Perpetual bonds, especially bank AT1s, typically rank below senior debt and sometimes below Tier 2 capital, meaning investors are among the first to absorb losses in a crisis.
Price sensitivity to interest rates. Because perpetual bonds have no fixed maturity, their prices can be more sensitive to interest rate changes than shorter-dated conventional bonds.
Perpetual Bonds vs Conventional (Fixed-Maturity) Bonds
| Feature | Perpetual Bond | Conventional Bond |
|---|---|---|
| Maturity date | None — indefinite, subject to issuer’s call option | Fixed, specified at issuance |
| Principal repayment | Not contractually guaranteed | Contractually guaranteed at maturity |
| Typical yield | Higher, to compensate for added risk | Lower for comparable credit quality |
| Coupon payment flexibility | May be deferrable (e.g., bank AT1 bonds) | Fixed obligation; missed payment is a default |
Source: General bond structure comparison, MAS and Basel III framework context.
The Bottom Line
Perpetual bonds offer Singapore income investors a higher yield than conventional bonds from the same issuer, but that extra yield compensates for real structural risks — no guaranteed principal repayment, potential coupon deferral, and subordination in the capital structure. They are best understood as a hybrid between a bond and equity, not a simple higher-paying version of an ordinary bond.
Frequently Asked Questions
Do perpetual bonds ever get repaid?
Why do Singapore banks issue perpetual bonds?
Can a perpetual bond issuer skip a coupon payment?
Are perpetual bonds riskier than regular corporate bonds?
Can retail investors in Singapore buy perpetual bonds?
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