debenture

Debenture

An unsecured debt backed only by the credit worthiness of the borrower.

Notes:

Debentures have no collateral, and the agreement is documented by an indenture. The yields may vary from high to low depending on who backs the debenture.

See also: Convertible Debenture, Debt, Indenture

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Debenture

Any debt obligation backed strictly by the borrower's integrity, e.g. an unsecured bond. A debenture is documented in an indenture.

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debenture

A corporate bond that is not secured by specific property. In the event that the issuer is liquidated, the holder of a debenture becomes a general creditor and therefore is less likely than the secured creditors to recover in full. Because of their high risk factor, debentures pay higher rates of interest than secured debt of the same issuer. See also subordinated debenture.