debt financing

(redirected from Debt-Financing)

Debt Financing

The act of a business raising operating capital or other capital by borrowing. Most often, this refers to the issuance of a bond, debenture, or other debt security. In exchange for lending the money, bond holders and others become creditors of the business and are entitled to the payment of interest and to have their loan redeemed at the end of a given period. Debt financing can be long-term or short-term. Long-term debt financing usually involves a business' need to buy the basic necessities for its business, such as facilities and major assets, while short-term debt financing includes debt securities with shorter redemption periods and is used to provide day-to-day necessities such as inventory and/or payroll. See also: Equity financing.

debt financing

The acquisition of funds by borrowing. For example, a business may use debt financing to raise funds for constructing a new factory. Corporations find debt financing attractive because the interest paid on borrowed funds is a tax-deductible expense. Compare equity financing.

debt financing

the financing of firms’ and governments’ deficits by the issue of FINANCIAL SECURITIES such as short- dated company BILLS OF EXCHANGE and government TREASURY BILLS, and, in the case of government, longer-term BONDS. See PUBLIC SECTOR BORROWING REQUIREMENT.
References in periodicals archive ?
Santos represents clients in sophisticated private company mergers and acquisitions, private equity transactions, debt-financing and general corporate matters.
The Bank of Japan's Policy Board voted 7-1 in favor of outright purchases of treasury and debt-financing bills, and continuing its zero-interest rate policy, at its Oct.
The minutes show board member Nobuyuki Nakahara voting against the proposal, but he did not oppose the introduction of outright purchases of treasury and debt-financing bills itself.
A major pillar of the package is to start publicly auctioning debt-financing bills next April, with their maturity being 13 weeks in principle and issuance occurring about once a week, ministry officials said.
Against this backdrop, it recommended the government consider offering debt-financing bills for public subscription, instead of the Bank of Japan taking up all such bills.