For an issuer, a fixed-income product is a form of debt that it is obliged to service (in terms of periodical interest payments) and repay (in terms of principal amount) at maturity date. This debt has priority over an issuer’s equity holders (of common shares, for example). For the investor (holder), it is a relatively low risk product as the payment obligation and redemption of principal is, under normal conditions, is guaranteed and precedes the rights of an issuer’s equity shares.

A fixed income product allows governments, companies, and local authorities (e.g., municipalities) to issue debt to the public in order to fund their activities and projects.