Debt capital market (DCM) refers to markets for buying and selling debt securities. The primary function of DCMs is to provide businesses and governments with a source of long-term funding to meet their growth and cash-flow needs. The chief difference between debt and equity capital is that while equity holders have an ownership stake in the business entity, while buyers of debt, such as bonds, are lenders who earn interest on their investment.
Debt capital markets are divided into primary and secondary markets. In primary markets, borrowers raise money directly from investors through bond issuance. In the secondary markets, investment funds, managers and others trade already-existing debt issuance with each other.