IBM Corp’s issue of $850m of 100-year 7.125% debentures (CI No 3,057) may not in fact survive for a century: the company retains the right to call the entire issue for redemption whenever the yield is equivalent to 15 basis points – hundredths of a percentage point – more than the then-current Treasury bond. As they were priced to yield 80 basis points over the Treasury’s benchmark 30-year bonds, that seems to imply they can be called at any time. According to the New York Times, the Treasury has opposed issue of very long maturity securities, and has proposed to eliminate corporate tax deduction for securities with maturities of over 40 years.
