Indian Financial Market - Debt

Indian stock market:

Debt:

“Debt” means debentures, the volume of the trade in debt market is very high value when compare to equity market in term of amount.

Debt are low risk with low volatilizes.

Debt instruments are contract between two people (I.e. lender and borrower)

One party lends money to another one pre-determined in terms of rate of interest to be paid by borrowers to lender, tenure of the people repayment and interest payment periodically.

In the Indian security markets, generally all use the terms as “bond” for debt instrument issued by central or state government and public sector organization and the term “debentures “for instrument issued by private corporate sector.

Features of bond:

Maturity, coupon and principal

In the market, maturity and term-to-maturity are used quite frequency.

Maturity:
Maturity of a bond refers to the date on which the bond matures, or the date on which the borrowers has agreed to repay the principal amount to the lender.

Term to maturity:
Term to maturity refers to the number of the years remains for the bond to mature.

Coupon:
Coupon rate refers to the periodic issue of payment that are made by the borrower to the lender a coupons are stated upfront either directly specifying the number (I.e. 18%) or indirectly tying with the benchmark rate.