👉 Debt engineering refers to the strategic manipulation of debt structures and financial instruments by corporations, governments, or financial institutions to optimize their capital costs, manage risk, or influence market perceptions. This practice involves creating tailored debt products with specific terms, such as variable interest rates, flexible repayment schedules, or embedded options, to achieve desired financial outcomes. For example, issuing floating-rate bonds can hedge against rising interest rates, while structured debt might include features like callable or convertible bonds to manage cash flow volatility. While debt engineering can enhance financial flexibility and potentially lower costs, it also carries risks, including increased complexity, hidden liabilities, and potential misalignment with long-term strategic goals if not carefully managed.
