UK Accounting Glossary
A debt instrument is a contractural or written assurance to repay a debt.
A debt instrument can be a promissory note, a bill of exchange, a bond or other such instrument. A debt instrument may also be referred to as an instrument of indebtedness. In most cases, a debt instrument can be sold, traded, or otherwise used as a form of currency or barter, with the debt owed to the debt instrument’s current holder. A debt instrument backed by a government agency – such as a U.S. Treasury Bond – or a highly-rated corporate bond with a fixed dollar payment may be defined as an asset. Defaulting on a debt instrument may result in the loss of the pledged collateral, or in a reduction of the credit rating of the entity which issued the debt instrument.
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This glossary post was last updated: 7th February 2020.