Top Ad unit 728 × 90




DEFINITION of 'Debenture'

A type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital. Like other types of bonds, debentures are documented in an indenture.


Debentures have no collateral. Bond buyers generally purchase debentures based on the belief that the bond issuer is unlikely to default on the repayment. An example of a government debenture would be any government-issued Treasury bond (T-bond) or Treasury bill (T-bill). T-bonds and T-bills are generally considered risk free because governments, at worst, can print off more money or raise taxes to pay these type of debts.

Read more: 
Follow us: @Investopedia on Twitter
Debentures Reviewed by sambasivan srinivasan on 8:54:00 PM Rating: 5

No comments:

All Rights Reserved by Bank Exams © 2009
Technology PartnerNiralcube

Contact Form


Email *

Message *

Powered by Blogger.