The Dutch Bond that's Still Paying Interest After 375 Years (Video)
In 1648, the Water Board of Lekdijk Bovendams faced the challenge of raising funds for essential embankment repairs. They decided to issue a unique bearer bond, promising annual payouts to its holder indefinitely. This financial concept, known as perpetual debt, was common during the Middle Ages. Unlike modern bonds with fixed maturity dates, perpetual bonds endure as long as the issuing entity survives. Fast forward 3½ centuries to Yale University in the USA, where this remarkable bond found its way. Having passed through multiple water board organizations, it now resides with Stichtse Rijnlanden, which continues to honor the bond's interest payments.
The bond's fascinating history lies in the fact that it was supported by taxing the beneficiaries of the protected levees, and since these regions didn't engage in wars that might exhaust funds, the bond endures. Though the bond's initial value of 1,000 carolus guilders has transformed into Euros over time, its annual interest payment remains €11.35. Yale's acquisition of the bond in 2003 led to the discovery of back interest, which was duly settled. Although the Dutch water authority could technically default on the debt, the bond's symbolic value and positive publicity make it a worthwhile investment.
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Top image: The Lekdijk Bovendams bond from 1624. Source: https://www.beursgeschiedenis.nl/
