Debt securities are issued by companies to fulfill their cash requirements. The issuer promises to pay back the principal amount, plus interest, at a certain date. There are two basic types of debt securities: hold-to-maturity and trading. Hold-to-maturity investments require a long-term commitment, while trading investments are made over a short time.
Foreign investors bought $26.3 billion worth of Canadian securities last month, mainly debt securities. Canadian investors also resumed their purchases of foreign securities, adding $15.2 billion to their portfolios. The amount is the largest since September 2020. The Canadian dollar depreciated against the US dollar for the third month.
Interest payments on debt securities are made by the paying agent to the registered owner of the debt securities. These payments are made on a specific date, typically at maturity, redemption, or repayment. Usually, the first interest payment is due fifteen days before the interest payment date. Some debt securities also pay interest in foreign currencies.
Fixed rate debt securities bear interest from the date of issue and through the date they are repaid or redeemed. They pay interest at the annual rate stated on their face. The interest is paid on a 360-day year, with twelve 30-day months.