Debt Securities
A debt security represents borrowed money that must be repaid, with terms that stipulate the size of the
loan, interest rate, and maturity or renewal date.
Debt securities, which include government and corporate bonds, certificates of deposit (CDs), and
collateralized securities (such as CDOs and CMOs), generally entitle their holder to the regular payment of
interest and repayment of principal (regardless of the issuer’s performance), along with any other
stipulated contractual rights (which do not include voting rights).
They are typically issued for a fixed term, at the end of which they can be redeemed by the issuer. Debt
securities can be secured (backed by collateral) or unsecured, and, if secured, may be contractually
prioritized over other unsecured, subordinated debt in the case of a bankruptcy