A Debt Instrument is a tool an entity can utilize to raise capital. It is a documented, binding obligation that provides funds to the borrower in return for interest. Debt instruments are broadly classified as fixed income securities, which include bonds and debentures, or as loans.The most common debt instrument is a bond which represents an investment in a company or governmental body's debt.Debt instruments are often used by borrowers because they provide immediate cash flow and can be structured to meet the needs of the borrower. They provide investors with higher returns than other types of investments such as stocks and shares because they are less risky and have predictable cash flows.A debt instrument is a tool an entity can utilize to raise capital. It is a documented, binding obligation that provides funds to the borrower in return for interest. Debt instruments are broadly classified as fixed income securities, which include bonds and debentures, or as loans. The most common debt instrument is a bond which represents an investment in a company or governmental body.
