With interest rates so low these days, one would not be wrong to wonder why are companies and even a REIT issuing perpetual bonds to raise funds with coupons of up to 7%. To a layman like me with very rudimentary understanding of economics, it could be one of two reasons:
1. The business or REIT concerned is not able to get loans because its business is too risky.
2. The amount of liquidity available in the banking system is drying up.
I do not have the necessary knowledge to do an in depth analysis on the reasons why. Indeed, I do not have the inclination as well. I am more interested in how these bonds might benefit me as an investor.
Generally, investors want to be correctly compensated for the risks they are asked to undertake. So, the riskier the investment, the higher the expected compensation. Otherwise, it is a no go.