Bonds & Debentures

What is Debt market?

Companies need money to undertake projects. Companies may approach banks or other landing institutions and take loan to fund projects. This borrowed money is repaid with interest to the bank. Similarly, a company can raise money from multiple investors in return for timely payment of interest, it is called Bond. Then the company pay back using the money earned through the project. Bond is a means of investing money by lending to others, that is why it is called debt instrument. There are debt instruments also like; Debentures, Commercial Papers, Certificates of Deposit, Government Securities (G-Sec), etc.

A bond is primarily characterized by its features such as; face value (i.e. amount of money borrowed), maturity of bond (i.e. when will the money borrowed be paid back), coupon rate (interest rate)