Short-term debt, that is, short-term bonds, generally refers to bonds with a maturity of less than one year and high liquidity. Long-term bonds usually refer to bonds with a maturity of more than one year and low liquidity. Relatively speaking, the hidden dangers of short-term bonds are less than those of long-term bonds, but at the same time the expected returns are also less than those of long-term bonds. Short-term bonds are purchased by financial institutions, companies and individuals. Financial institutions, in particular, buy more short-term government bonds and short-term corporate bonds and regard them as secondary reserves of personal assets. Appropriate short-term bonds promote the development of financial markets and make the issuance conditions of bonds more favorable. Especially in the early stage of financial market, it can activate the market and lay the foundation for the issuance of long-term bonds. At the same time, the massive issuance and circulation of short-term bonds also enables the central bank to use various monetary instruments to deal with bonds, so as to regulate the currency circulation and stabilize the financial market. This is short-term debt.
The difference between short-term debt funds and long-term debt funds
1, with different holding periods: short-term debt funds usually need 6- 12 months, while long-term debt funds usually need 1-2 years;
2. Different expected returns: the expected returns of short-term debt funds will be higher than those of long-term debt funds, because long-term debt funds are sensitive to interest rates, and once the central bank raises interest rates, its yield will be affected;
3. Different risks: short-term debt funds invest in short-term bonds, so the liquidity is relatively strong and the risk is low, while long-term debt funds have interest rate risk and credit risk.
This article mainly talks about what is short-term debt, and the content is for reference only.