when a company or government agency decides to take out a loan it has two options the first is to get financing from a bank the other option is to issue debt to investors in the capital markets this is referred to as a debt issue the issuance of a debt instrument by an entity in need of capital to fund new or existing projects or to finance existing debt this method of raising capital may be preferred as securing a bank loan can restrict how the funds can be used 
a debt issue is essentially a promissory note in which the issuer is the borrower and the entity buying the debt asset is the lender when a debt issue is made available investors buy it from the seller who uses the funds to pursue its capital projects in return the investor is promised regular interest payments and also repayment of the initial principal amount on a predetermined date in the future corporations and municipal state and federal governments offer debt issues as a means of raising needed funds debt issues such as bonds are issued by corporations to raise money for certain projects or to expand into new markets municipalities states federal and foreign governments issue debt to finance a variety of projects such as social programs or local infrastructure projects in exchange for the loan the issuer or borrower must make payments to the investors in the form of interest payments the interest rate is often called the coupon rate and coupon payments are made using a predetermined schedule and rate by issuing debt an entity is free to use the capital it raises as it sees fit special considerations