Debt obligation - Financial definition

In finance, a debt obligation refers to a legal agreement where one party borrows funds from another with the promise of repayment, usually with interest, over a specified period. These obligations can take various forms such as bonds, loans, or promissory notes and are typically issued by governments, corporations, or individuals to raise capital. Debt obligations play a crucial role in financial markets, providing investors with fixed-income securities while allowing borrowers to access capital for investments or operations. Examples include government bonds, corporate bonds, mortgages, and revolving credit facilities.