Types of debt securities

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What are debt securities?

In the context of debt capital markets (see Practice Note: Key features of the debt capital markets), the term 'debt security' generally means a financial instrument, negotiable on the capital markets, which represents a debt obligation.

The debt capital markets are generally used by corporates, governments and multi-lateral agencies to raise finance from an investor base consisting mainly of investment funds, pension funds, insurance companies and other so-called institutional investors (also known as professional investors) but sometimes also individuals (retail investors) (see Practice Note: Parties in an issue of debt securities) The main categories of debt securities are:

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bonds (also known as notes)
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medium-term notes (MTNs), and
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commercial paper (CP)

General characteristics of debt securities

Most debt securities share a number of key characteristics, specifically:

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they are transferable instruments
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they bear interest or are issued at a discount to their face value
•
they must be redeemed by the issuer on a specified

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