Legal Definitions - debt retirement

Definition: Debt retirement refers to the repayment of debt.

Debt Security: A debt security is a financial instrument that represents a loan made by an investor to a borrower. Examples of debt securities include bonds, notes, and debentures.

Debt Service: Debt service refers to the funds needed to meet a long-term debt's annual interest expenses, principal payments, and sinking-fund contributions. It also includes payments due on a debt, including interest and principal.

Example: If a company takes out a loan to purchase new equipment, they will need to make regular payments to the lender to retire the debt. These payments will include both interest and principal, and will continue until the entire debt has been repaid.

Explanation: The example illustrates the concept of debt retirement by showing how a company must make regular payments to retire a debt. These payments include both interest and principal, and continue until the entire debt has been repaid.