Updated on March 1, 2023
A debt instrument is an asset that a business, government or institution uses to raise capital for funding requirements or for generating income. A company may need to buy new equipment or machinery, set up a plant while the government may need financing for large infrastructure projects, construction of vital road networks, ports, highways etc. Debt price is the price of such a debt instrument and it gives the general direction of interest rates. Debt price depends on various factors like the economic activity, the demand and supply conditions, the overall business environment, prevailing interest rates, central bank policy etc. Debt is an important constituent of a diversified portfolio and thus Debt price is of immense interest to all the interested stakeholders. Debt price is impacted by the rising and falling interest rates and the Debt yield can change accordingly.