Funded debt

Funded debt is money acquired through the sale of long-term securities. The most common type of funded debt is bonds. The concept is usually applied to debt instruments that do not mature within the next 12 months. The funded debt term is derived from the interest payments being made to obtain the use of funds - in effect, the debt is being funded through the payment of interest. This is a relatively safe form of debt financing, since the borrower can lock in an interest rate for a prolonged period of time.