Learn what loan stock is, how it functions as issuer borrowing, and why it is closer to debt than to ordinary equity.
Loan stock is a form of long-term borrowing raised by issuing debt securities to investors.
Despite the word “stock,” loan stock is generally a debt instrument rather than an ownership claim.
An issuer raises funds from investors and promises interest payments plus principal repayment under agreed terms. Depending on the jurisdiction and structure, loan stock may resemble debentures, notes, or bonds. Holders expect contractual cash flows, not residual ownership upside like common shareholders.
The term matters because it highlights the difference between financing with debt and financing with equity. Loan stock affects leverage, interest expense, and creditor priority, especially in insolvency or restructuring.