Many companies never intend to reduce their debt to zero. Instead, they roll
over their debt:
Rather than paying off the principle of a debt when it comes due, you take out
another loan for that amount to pay off the first debt. This will often be the
same lender you owe the money to. The terms may change (due date, interest
rate) and could be better or worse for the borrower depending on the interest
rate environment (and of course his credit rating).
So to answer your question directly, these companies do not pay both principal
and interest periodically because they aren't trying to reduce their
debt. Instead they expect to roll it over.
Moreover, recall that the enterprise value of a business is the sum of its
market capitalization and its debt. From this perspective, a business is thought of as being
owned by both equity-holders and debt-holders. Assuming the business is
successful, the debt holders expect periodic payments of interest and get paid
first out of profits. The remaining profit is owned by the equity
holders. Thus, these two classes -- the equity holders and the debt holders --
together "own" the enterprise. These kinds of businesses generally do not seek
to remove the debt holders from the business. The debt-to-equity ratio may
bounce around, but generally never falls to zero because the debt is rolled
As long as the business remains sucessful, there is generally never a lack of
investors willing to buy debt. The main issue is the interest
rate, not the availability of credit.
Businesses deploy the capital raised by debt issuances to fund projects and
build the business. They do so with the belief that for every dollar they
deploy they can generate cash flow of more than a dollar. If they were to use
some of that cash flow to pay off principal, then they would have fewer dollars
to deploy funding projects and building the business. If they believe their rate
of return is greater than their cost of capital, they should prefer to spend
their dollars investing in projects instead of not paying off debt.
PS. There are such things as sinkable bonds which are
backed by a fund that sets aside money to ensure principal and interest
payments are made by the issuer as promised.
Sinkable bonds are used to attract investors who may otherwise find the
business's creditworthiness too risky.