debt securities

This term has a number of meanings depending on the context in which it is used:

• Generally, a debenture, a government and public security or a warrant which confers a right in respect of an investment in a debenture or government and public security.

• For the purposes of the Listing Rules and chapters 2 and 3 of the Disclosure Rules and Transparency Rules, debentures, debenture stock, loan stock, bonds, certificates of deposit or any other instrument creating or acknowledging indebtedness

• For the purposes of the Financial Services and Markets Act 2000, chapters 4, 5 and 6 of the Disclosure Rules and Transparency Rules and the Transparency Directive, bonds or other forms of transferable securitised debts, except securities which are equivalent to shares in companies or which, if converted or if the rights conferred by them are exercised, give rise to a right to acquire shares or securities equivalent to shares.

Eurobonds, medium term notes and commercial paper are all examples of debt securities.

Related links

bearer debt securities

transferable security

+debt security

USA

Also known as bond, debenture and note.

A security representing debt of the issuer. An issuer sells registered debt securities to an investor pursuant to an indenture. Unregistered debt securities are usually sold pursuant to a note, or securities purchase agreement.

There are several types of debt securities:

• Bonds, which are debt instruments in which the issuing company or governmental body promises to pay the holders a specified amount of interest for a specified length of time and to repay the principal amount of the loan at maturity. A bond is typically a long-term debt instrument. Its holder is a creditor of the company and has no ownership rights as a stockholder does.

• Debentures, which are long-term debt instruments used by governments and large companies to obtain funds. A debenture is evidence of a debt on which the issuer promises to pay the holders a specified amount of interest for a specified length of time and to repay the principal amount of the loan at maturity. It is similar to a bond. A debenture is usually not secured by any collateral.

• Notes, which are debt securities that usually have a short-term maturity of between one and 10 years.

Although each of these debt securities have slightly different definitions, the terms "bond," "note" and "debenture" are often used interchangeably to refer to the same types of debt securities.

Related terms

event of default