U.S. life insurers and pension funds may like long bonds, but 100 years is probably too long even for most of them.
The Treasury Borrowing Advisory Committee, an arm of the Securities Industry and Financial Markets Association, gave Treasury Secretary Steven Mnuchin that assessment in a report last week.
The committee looked at the idea of offering ultra-long bonds, such as 50-year bonds or 100-year bonds. Advocates say ultra-long bonds could give the Treasury a stable new source of financing and help institutional investors match liabilities with very long durations with bonds with similar durations.
The managers of the Medicare and Social Security trust funds have prepared projections showing what their financial situation might look like in 2090.
In theory, a family could buy a lifetime income annuity from a commercial life insurer this year, to cover a child’s expenses for a lifetime. The annuity could make income payments for 80 years or more.