Pure debt refers to a financial obligation where one party, known as the debtor, owes a specific amount of money to another party, known as the creditor. This type of debt does not involve any additional features or elements that might complicate the arrangement, such as the inclusion of equity or hybrid securities. It is a straightforward transaction in which the debtor agrees to repay the borrowed amount, typically with interest, over a designated period of time.
Pure debt can take various forms, such as loans, bonds, promissory notes, or debentures. These instruments document the terms and conditions of the debt, including the principal amount, interest rate, repayment schedule, and any other agreed-upon terms. The creditor provides the debtor with funds, which are to be repaid according to the established terms.
Pure debt is typically used by individuals, businesses, or governments to secure necessary funds for various purposes, such as investment in projects, financing operations, or personal expenditures. It offers a relatively straightforward and secure method of acquiring capital, as the terms of repayment are pre-determined and legally binding.
In summary, pure debt represents a straightforward financial obligation where one party borrows a specific amount of money from another party and agrees to repay it over a designated period of time, typically with interest. It does not involve any equity or hybrid securities, making it a direct and uncomplicated financial arrangement.
