Debt Security

Term Main definition
Debt Security

A security evidencing a loan by the purchaser of the debt security and a debt obligation of the company issuing the debt security, and examples of debt securities would include notes and debentures. The principle features of a debt security are, as with a commercial loan transaction, the term of the instrument (loan), the maturity date, the payment schedule, the original principal amount, the interest rate, the covenants and default provisions, and a debt security also sometimes provides conversion rights. The issuer issues and sells debt securities to a purchaser pursuant to a securities purchase agreement, and debt securities are usually marketed privately to investors.