Debt Securities, also known as Fixed Income Securities, are financial instruments that represent a loan made by an investor to an issuer, such as a corporation or government. In return for lending the funds, the issuer promises to pay the investor a fixed or floating interest rate over a specified period and to repay the principal amount at maturity. Debt securities can take the form of bonds, notes, bills, and other types of fixed-income instruments.

In Australia, debt securities are regulated by the Corporations Act 2001, which sets out the legal framework for the issue and trading of securities, including debt securities. The Act requires that issuers provide relevant information to investors, including the terms and conditions of the securities, and sets out the obligations of the issuer and the rights of the investors.

There are various types of debt securities, including:

• Government bonds: Issued by the government, government bonds are considered among the safest fixed-income investments, as the risk of default is low.
• Corporate bonds: Issued by corporations, corporate bonds are considered to be riskier than government bonds, as the risk of default is higher. However, they can offer higher yields compared to government bonds.
• Floating rate notes: Floating rate notes pay a variable rate of interest tied to a benchmark interest rate, such as the interbank lending rate. This type of security can benefit investors looking for income protection against rising interest rates.
• Convertible bonds: Convertible bonds can be converted into a specified number of shares of the issuer’s stock. This type of security could benefit investors seeking exposure to the equity market while also receiving a fixed income stream.