Ah, the Lindy Effect raises its elderly head.*
From Bloomberg via The Mercury-News, February 9:
Alphabet Inc. plans to sell a very rare 100-year bond as part of its mega debt issue, in the first sale of such long-dated debt by a technology firm since the late 1990s
Alphabet Inc. plans to sell a very rare 100-year bond as part of its mega debt issue, in the first sale of such long-dated debt by a technology firm since the late 1990s.
The 100-year bond will be denominated in sterling, along with four other tranches in the currency, according to a person familiar with the matter. The deal, which is Alphabet’s debut sterling sale, could be priced as early as tomorrow, the person added, asking not to be identified.
It marks the first sale with such an extreme maturity by a technology firm since Motorola sold this type of debt in 1997, according to data compiled by Bloomberg. The market for 100-year bonds is dominated by governments and institutions like universities. For corporates, potential acquisitions, outdated business models and technological obsolescence make such deals a rarity.
Still, given the sheer volume of debt that tech firms need to raise to stay ahead in the race to build artificial intelligence capabilities, even ultra-rare deals are making a comeback.
“They want to tap every kind of investor possible from the structured finance investor to the super long-dated investor,” said Gordon Kerr, European macro strategist at KBRA. The main buyer of the 100-year bond would be insurance companies and pension funds, and “the guy who underwrites it is probably not going to be the guy who’s there when it gets repaid,” he said.
Strong demand from UK pension funds and insurers has made the sterling market a go-to venue for issuers seeking longer-dated funding.
Still, excluding government issuers, only Electricite de France SA, the University of Oxford and the charitable foundation Wellcome Trust Ltd have issued 100-year bonds in the currency before, based on data compiled by Bloomberg....
Toby Ord (University of Oxford)
The Lindy effect is a statistical tendency for things with longer pasts behind them to have longer futures ahead. It has been experimentally confirmed to apply to some categories, but not others, raising questions about when it is applicable and why. I shed some light on these questions by examining the mathematical properties required for the effect and generating mechanisms that can produce them. While the Lindy effect is often thought to require a declining hazard rate, I show that it arises very naturally even in cases with constant (or increasing) hazard rates — so long as there is a probability distribution over the size of that rate. One implication is that even things which are becoming less robust over time can display the Lindy effect.One book has been in print for three years; another for three hundred. Which should we expect to go out of print first?
The Lindy effect is a statistical regularity where for many kinds of entity: the longer they have been around so far, the longer they are likely to last. This was first clearly posed by Benoît Mandelbrot (1982, p. 342) in his book, The Fractal Geometry of Nature: ‘However long a person’s past collected works, it will on the average continue for an equal additional amount. When it eventually stops, it breaks off at precisely half of its promise.’
Mandelbrot called this effect ‘Lindy’s Law’ in honour of an anecdote by Albert Goldman (1964) about how the future career length of a comedian might be predicted from their past exposure....
....MUCH MORE (20 page PDF)
And at The New Republic, June 13, 1964:
According to a law established and
promulgated by bald-headed, cigar-
chomping know-it-alls who foregather
every night at Lindy's, where always
punctuating their talk with the same
expression - a long, quizzically inflected
"Fun-ny?" - they conduct post-mor-
tems on recent show biz "action," the
life expectancy of a television come-
dian is proportional to the total amount
of his exposure on the medium.
If, pathetically deluded by hubris, he
undertakes a regular weekly or even
monthly program, his chances of sur-
vival beyond the first season are slight;
but if he adopts the conservation of
resources policy favored by these sen-
escent philosophers of "the Business,"
and confines himself to "specials" and
"guest shots," he may last to the age
of Ed Wynn....
