Definition: Index-linked security
External debt - IMF
Index-linked securities are debt instruments with coupon and/or principal payments linked to commodity prices, interest rates, stock exchange, or other price indices. The benefits to the issuer of indexing include a reduction in interest costs if the deal is targeted at a particular group of investors’ requirements, and/or an ability to hedge an exposed position in a particular market. The benefit to investors is in the ability to gain exposure to a wide range of markets (for example, foreign exchange or property markets) without the same degree of risk that may be involved in investing in the markets directly. Issues linked to a consumer price index also provide investors with protection against inflation.
International Monetary Fund (IMF), "External Debt Statistics: Guide for Compilers and Users; Appendix I. Specific Financial Instruments and Transactions: Classifications", Washington D.C., 2003