SGD perpetuals: Are these bonds or equity?

PERPETUALS, as the name suggests, are distribution-paying instruments with no maturity date. Following the 2007-08 Global Financial Crisis, which saw global interest rates pinned down to historical low levels, perpetuals had a good run with over S$40 billion issued in the SGD bond market since 2009. Issuers were varied, ranging from banks, Reits, and industrial and property companies which looked to raise capital at a reasonable funding rate.

Investing in perpetuals as a strategy had broadly outperformed investing in the vanilla bonds of the same issuer. This is because perpetuals paid a higher distribution rate and most issuers have redeemed the perpetuals when the call date came due (with the exception of Ezion Holdings Ltd). Calls are typically embedded in perpetuals, which give issuers the option to redeem perpetuals at a certain date.

Perpetuals have behaved like bonds during good times