Debt investment refers to investors lending money to companies or projects with expectation that the borrower will pay back the investment with interest. So, when investors invest in debt investment they are lending money to the company. In return, the company makes commitment to pay interest on the principal and, in most cases, to return the principal when the debt comes due, or matures.

To understand debt investment, it is helpful to compare them with stocks. When you buy a share of a company, you own equity in the company and will receive any dividends declared and paid by the company. When you buy a debt investment such as corporate bond, you do not own equity in the company. You will receive only the interest and principal on the bond, no matter how profitable the company becomes or how high its stock price climbs.

Companies use  proceeds from debt investments for a wide variety of purposes, including expanding their business, buying new equipment, investing in research and development, buying back their own stock, paying shareholder dividends, refinancing debt, and financing mergers and acquisitions etc.

The basic types of debt investments are bonds and debentures.