A bond is a debt agreement issued by an individual or a company to raise money. When a debt is raised there are various terms and conditions as well as attributes attached to the respective debt. A bond is always accompanied by the details such as the price of the bond, quantity of the bonds issued, issue date, coupon rate, maturity date, and so on and such details are provided on the prospectus.

Therefore, a prospectus is a legal document issued by a corporation that is soliciting money in the form of bonds for sale.

Such a document is highly vital to be presented ahead of the sale of bonds in the interest of investors' protection.

Simply it is an offering document containing all the facts about the issuer and the offering that guides investors to make informed decision making.

A prospectus is divided into two types namely Preliminary and Final prospectus.

Preliminary prospectus- Preliminary prospectus is provided before the finalizing of the bond issuance and contains the details of the business of the issuer, management structure, financial statements, strategic initiative, and ownership structure.

Final prospectus - Final prospectus is filed post the bond issuance is finalized and completed. This document consists of the details of the transaction and is made available to investors considering buying the bonds.

However, the key difference between the preliminary prospectus and final prospectus is that the preliminary prospectus does not mention the issue price and size of the bond because the bond issuance is not effective until the final prospectus is in place. Hence, a preliminary prospectus is used as marketing material to grab the interests of potential investors.

Component included in the prospectus are as follows::

Overview of the company- An overview of the company since its inception needs to be disclosed in the prospectus.

Services offered by the company- It includes the activities undertaken by the company serving its customers.

Management of the company- Information about the company’s management needs to be outlined.

Deal structure- Under the deal structure, the issuer can provide an overview of the existing debt structure that helps investors to get an idea of the company's ability to repay debt.

Use of proceeds- use of proceeds from the debt raised needs to be specified whether it is refinancing its existing debt or any other purpose.

Bond offering details- Prospectus offers thorough data concerning the number of securities being offered to the general public and the price of each security.

Past financial performance- The prospectus provides investors with information about the issuer’s past financial performance.

A prospectus is a very vital part of the debt issuance and crucial from the investors perspective as it informs the investors about the risks associated with investing in the security