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What are debt securities?

In the context of the debt capital markets, the term 'debt security' means a financial instrument, negotiable on the capital markets, which represents a debt obligation.

The term 'security' when used in this sense is therefore different from the term 'security' in the sense of a 'security interest' such as a mortgage or charge, see Practice Note: Types of security.

Issuing a debt security is a common alternative to borrowing money by way of a loan (for more information on loan financing (see: Types of lending—overview and for a comparison of debt issuance and loans, see Practice Note: Debt capital market finance versus loan finance). The principal types of debt securities used in the debt capital markets are:

1. •

   bonds (also referred to as notes)

2. •

   medium-term notes, and

3. •

   commercial paper

Bonds or notes

Bonds or notes:

1. •

   can be issued on a standalone basis (to raise a lump-sum amount from a one-off issue), or

2. •

   can be issued under a programme (which faciltates the raising of several amounts from