Debentures are a type of debt instrument that is not secured by physical assets or collateral. A debenture is a medium to long-term loan format used by large companies to borrow money. They are supported only by the general credit and reputation of the issuer.
Debentures are usually loans that are repayable on a fixed date, but some debentures are inexhaustible securities, meaning they do not have a fixed date for the expected return of funds.
Both corporations and governments often issue these types of bonds to secure capital. Like other types of bonds, debentures are documented in an indent.
Types of debentures:
Convertibility Debentures :-
These debentures can be converted into equity shares of the issuing company after the issue period. These can be partially convertible or fully convertible debentures.
debentures These are regular debentures that cannot be converted into equity shares. These are debentures without the convertibility feature; These typically carry higher interest rates than their variable counterparts.
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