- Debt market is a market meant for buying or selling of debt securities also called as bonds or ﬁxed income securities.
- The debt market in India consists of mainly two categories the government securities or the G-Sec markets comprising central government and state government securities, and the corporate bond market.
- In order to finance its fiscal deficit, the government floats fixed income instruments and borrows money by issuing G-Secs that are sovereign securities issued by the Reserve Bank of India (RBI) on behalf of the Government of India.
- A bond is simply a loan with a deﬁnitive instrument features taken (issued) by an entity from the lender. Here, the entities taking a loan could be governments (central, state or municipal bodies) or companies (PSUs, private corporates, ﬁnancial institutions etc) and are called as Issuers.
- The corporate bond market (also known as the non-Gsec market) consists of financial institutions (FI) bonds, public sector units (PSU) bonds, and corporate bonds/debentures.
- The lender could be individuals, corporates, mutual funds, banks or anybody who invests in order to receive periodic income and are called as Investors.
- Corporate bonds are debt securities issued by private and public corporations.
- Bond is simply a loan between the issuer (borrower) and the bondholder (lender). When you purchase a bond, you are lending money to any entity known as issuer. In return, you receive a bond and issuer pays ﬁxed interest on the amount of money you lend.