Debt Securities: The Ultimate IOU Guide

What Are Debt Securities?

Think of debt securities as the financial world's version of borrowing a fiver from your mate, except instead of paying it back next week, you promise to return it with interest in a few years (and with a lot more legal paperwork). They’re basically glorified IOUs that corporations, governments, and institutions use to raise cash without the awkwardness of asking politely.

Why do issuers bother with debt securities? Simple: they need money but don’t fancy giving away ownership. Why do investors buy them? Because getting paid to lend money is better than stashing it under the mattress. Most of these securities can be bought and sold in capital markets, meaning investors can cash out before the final “payback” date.

Now, let’s wade through the wonderful world of bonds, notes, and their various financially flavoured cousins.