Debt

From Reuters Financial Glossary

The supply of funds from a creditor to a debtor in exchange for interest and a commitment to return the funds in full at a fixed date in the future. Debt is usually in the form of financial instruments such as bonds, bills and notes. Creditors, who can be private individuals, banks or institutions such as pension funds and insurance companies, lend the money in the belief that the debtor will honour the obligation to pay the interest and eventually to repay the capital of the loan. Debt instruments have a defined life, a maturity date and normally pay a fixed rate of interest. All purchasers of debt have a supply of cash which is not immediately needed, on which they wish to earn interest until it is required for their own direct use. The interest is a payment for their willingness to forgo use of the funds for a fixed time.

See also: Debt, Notes