What Are Debt Instruments?
Debt instruments represent loans made by investors to companies, with promised repayment of principal plus interest. Secured debt is backed by company assets as collateral, while unsecured debt relies solely on the company's creditworthiness.
In Ghana's financial markets, debt instruments provide stable income streams and are essential components of diversified investment portfolios.
Types of Debt Instruments
Secured Debt
- • Backed by company assets
- • Lower interest rates
- • Priority in bankruptcy
- • Asset collateralization
Unsecured Debt
- • No specific collateral
- • Higher interest rates
- • General creditor status
- • Based on credit rating
How You Earn Returns
Regular Interest
Receive fixed or variable interest payments monthly, quarterly, or annually.
Principal Repayment
Get your original investment back at maturity or according to repayment schedule.
Example Return Calculation
Invest GHS 10,000 in secured corporate bonds with 12% annual interest for 3 years. You receive GHS 1,200 interest each year, totaling GHS 3,600, plus your GHS 10,000 principal back at maturity.
Risks to Consider
Default Risk
Company may fail to make interest payments or repay principal.
Interest Rate Risk
Rising interest rates may make your fixed returns less attractive.
Inflation Risk
Fixed returns may not keep pace with inflation over time.
Quick Facts
Legal Framework
Debt instruments in Ghana are governed by:
- • Borrowers and Lenders Act, 2020
- • Companies Act, 2019
- • Securities Industry Act, 2016
- • Bank of Ghana Regulations