Debt securities are the financial instruments which are used to raise money by the seller parties from the buyers and include basis contracts or terms like notional principal, interest rate or yield rate, coupon payment, tenure or maturity date etc. These financial instruments are widely used by the central and state government of different countries and companies worldwide to raise money from the other investors or financial institutions. Most debt instruments are traded over the counter and properly regulated by the local government to make the most efficient tool to raise money from market.
There are different types of debt instruments which are mainly available in the market. They are:
Collateralized Mortgage Obligations: Derivative instruments used to raise money based on some already existing mortgage loans in the market.