Definition of Debt instrument:
A debt instrument is a tool an entity can utilize to raise capital. It is a documented, binding obligation that provides funds to an entity in return for a promise from the entity to repay a lender or investor in accordance with terms of a contract. Debt instrument contracts include detailed provisions on the deal such as collateral involved, the rate of interest, the schedule for interest payments, and the timeframe to maturity if applicable.
Any type of instrument primarily classified as debt can be considered a debt instrument. Debt instruments are tools an individual, government entity, or business entity can utilize for the purpose of obtaining capital. Debt instruments provide capital to an entity that promises to repay the capital over time. Credit cards, credit lines, loans, and bonds can all be types of debt instruments.
Document that serves as a legally enforceable evidence of a debt and the promise of its timely repayment. Bankers acceptance, bills of exchange, bonds, certificates of deposit, debentures, and promissory notes, all are debt instruments.
How to use Debt instrument in a sentence?
- Businesses have flexibility in the debt instruments they use and also how they choose to structure them.
- Any type of instrument primarily classified as debt can be considered a debt instrument.
- A debt instrument is a tool an entity can utilize to raise capital.
Meaning of Debt instrument & Debt instrument Definition