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Max Manturov

Max Manturov

Head of investment research regulated by CySec 23.09.2021

Five High-Yielding Perpetual Bonds to add to your Portfolio

A perpetual bond is a debt instrument that has no set maturity date. The issuer does not pay the investor the bond's par value, but the investor receives a regular coupon yield. In addition, it will be larger than the redeemed bonds' dividend and more reliable than the preferred share dividend. The fundamental benefit of perpetual bonds is that they can provide a lifetime pay-out to their owners.

The interest paid by the issuer to bondholders is known as the coupon (or coupon yield). Their amount is determined by the bond's face value and can be fixed or floating (depending on the market interest rate, for example).

The investor has two options for getting out of such bonds: sell them on the secondary market or wait for the call option to be exercised, in which the issuer will redeem the securities at a predetermined price. The time between placement and the first call or between call options in established markets is typically ten years, whereas it is five years in emerging markets.

In general, these types of securities will appeal to people looking for a steady stream of income over time. Our analysts have chosen the five most promising dollar bonds for such investors: 

General Electric (BBB + rating)

ISIN: US369604BP74
Current price in%: 97.5
Face value: $1,000
Coupon rate: 4.2%
Next call: 06/15/23
Yield to worst: 5.79%
Coupon type: before 06/15/2023 - 4.2%, after 06/15/2023 - 3M LIBOR USD + 2.37%
Loan outstanding: $ 94.7 million
Sector: engineering industry

One of America's largest industrial conglomerates, producing locomotives, power plants, gas turbines, aviation engines, medical equipment, photographic equipment, household goods, military products, and other items, General Electric also performs orders for the federal government of the United States. Military orders, on the other hand, account for roughly 20% of the company's expenditure.

Debt level:

● Cash and cash equivalents: $28.594 billion

● Ratio of debt to equity: 189.7%

● Net debt / EBITDA for the last 12 months: 4.79x

● Covering EBIT to interest over the last 12 months: -

● Free cash flow, last 12 months: $ 315 million     

Buy General Electric Bonds >>

Softbank Group (BB +)

ISIN: XS1642682410
Current price in%: 101.19
Face value: $ 1,000
Coupon rate: 6%
Next call: 19.07.23
Yield to worst: 5.39%
Coupon type: until 07.19.2023 - 6%, from 07.19.2023 to 07.19.2038 - 5Y USD Swap Rate + 4.226%, after 07.19.2038 - 5Y USD Swap Rate + 4.976%
Loan outstanding: $ 2.750 billion
Sector: communications

Tokyo-based Japanese multinational conglomerate. Owns holdings in a number of technology, energy, and financial firms. The Vision Fund is the world's largest technology-focused venture capital fund. Forbes Global 2000 ranks it as the world's 27th largest public company and the second-largest in Japan after Toyota.

Debt level:

● Cash and cash equivalents: $58.957 billion

● Ratio of debt to equity: 197.97%

● Net debt / EBITDA for the last 12 months: 2.22x

● Covering EBIT to interest over the last 12 months: 4.21x

● Free cash flow, last 12 months: $ -4.674 billion     

Buy Softbank Group Bonds >>

CIFI Holdings (BB)

ISIN: XS1653470721
Current price in%: 100.81
Face value: $ 1,000
Coupon rate: 5.38%
Next call: 08.24.22
Yield to worst: 4.55%
Coupon type: before 08.24.2022 - 5.375%, after 08.24.2022 - 5Y UST Yield + 8.571%
Loan outstanding: $300 million
Sector: construction and engineering equipment

Hong Kong-based investment holding company involved in the building and selling of real estate in China. The corporation also invests in and rents out its own property.

Debt level:

● Cash and cash equivalents: $8.195 billion

● Ratio of debt to equity: 282.45%

● Net debt / EBITDA for the last 12 months: 3.78x

● Covering EBIT to interest over the last 12 months: 12.78x

● Free cash flow, last 12 months: $ -495 million     

Buy bonds of CIFI Holdings >>

General Motors Financial (BBB)

ISIN: US37045XCA28
Current price in%: 109.92
Face value: $ 1,000
Coupon rate: 5.75%
Next call: 09/30/27
Yield to worst: 3.93%
Coupon type: before 09/30/2027 - 5.75%, after 09/30/2027 - 3 month USD-Libor + 3.598%
Loan outstanding: $1 billion
Sector: other financial institutions

A global provider of car loan services, division of General Motors. Works in the US, Latin America, Canada, Europe, and China markets. Customers can apply for General Motors Financial loans and leases directly at vehicle dealerships. It was a Fortune 1000 company before GM's takeover in 2010.

Debt level:

● Cash and cash equivalents: $ 29.131 billion

● Ratio of debt to equity: 214.6%

● Net debt / EBITDA for the last 12 months: 3.17x

● Covering EBIT to interest over the last 12 months: 12.19x

● Free cash flow, last 12 months: $ -681 million     

Buy General Motors Financial Bonds >>


Current price in%: 105.14
Face value: $ 1,000
Coupon rate: 5.13%
Next call: 08.24.22
Yield to worst: 3.91%
Coupon type: before 09/08/2026 - 5.125%, after 09/08/2026 - 5Y UST Yield + 4.534%
Loan outstanding: $1 billion
Sector: construction and engineering equipment

The third-largest cement producer in the world based in Mexico. Cemex now has 66 cement factories, 400 quarries, 260 distribution facilities, and 80 marine ports spread across four continents. The company's manufacturing plants are spread over 20 nations. CEMEX's sales exceed $23.2 billion, and the company employs over 50,000 people in 50 countries across the world.

Debt level:

● Cash and cash equivalents: $1.528 billion

● Ratio of debt to equity: 91.25%

● Net debt / EBITDA for the last 12 months: 2.52x

● Covering EBIT to interest over the last 12 months: 0.71x

● Free cash flow, last 12 months: $ -1.505 billion     

Buy CEMEX Bonds >>

How Do I Buy Bonds?

If you do not already have an investment account, open it right now - you can do it online in 10 minutes. To do this, all you need to do is fill out a short questionnaire and go through verification.

After opening an account, you can buy bonds in these convenient ways:

1. Via the Freedom24 web-based trading platform. Search for ISIN bonds in the "Web Terminal" section. From the search results, select the company you want. Next, open a securities section in the trading window (on the right), pick the needed amount of bonds, and click the "Place a buy order" button.

2. Via the Freedom24 app for iPhone App and Android. In the "Quotes" window, click the search icon in the upper right corner. In the search window, type the company's ISIN and then choose the needed company from the list of results. Click on it and select the "Order" tab in the opened card. Specify the required number of bonds and click the "Place a buy order" button.     

*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Europe Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance Europe Ltd. do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance Europe Ltd. and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.

  • Sources of information

  • Recommendation evaluation methodology in accordance with Terms and Conditions of Market Research Use
    Freedom Finance analysts perform a three-stage analysis. They select a promising industry based on the latest news, statistics and industry-specific metrics. They assess the supply and demand situation and its future development dynamics. Industry’s investment attractiveness is mostly affected by the forecasted market growth rates; total addressable market, player concentration level and likeliness of a monopoly formation, as well as the level of regulation by various entities or associations.

    The assessment is followed by the comparative analysis based on the selected sample. The sample comprises companies with a market capitalization of over USD 1 billion, but there is space for exceptions (when the suitable level of liquidity for company’s securities is available on the stock exchange). The selected companies (peers) are being compared against each other based on multipliers (EV/S, EV/EBITDA, PE, P/FCF, P/B), revenue growth rates, marginality and profitability (operating income margin, net income margin, ROE, ROA), and business performance.

    Having completed the comparative analysis, the analysts carry out a more in-depth research of the news about the selected company. They review company’s development policy, information about its current and potential mergers and acquisitions (M&A activity), and assess the efficiency of company's inorganic growth and other news about it over the past year. The main objective at this stage is to identify the growth drivers and evaluate their stability, as well as the extent of impact they have on the business.

    Based on all the data collected, the analysts determine the weighted forecasted figures of company’s growth rates and proposed business marginality, which are used to calculate the company’s multiplier-based estimated value. The said value enables setting the stock price target and stock value growth potential.

    The expected timing of the idea implementation is set depending on the current market situation, volatility level and available forecasting horizon for industry and company development. The forecasting period is normally set between 3 and 12 months.