Debenture

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

Debenture

A debt security, issued by a government or large company, that is not secured by an asset or lien, but rather by the all issuer's assets not otherwise secured. That is, a debenture carries no collateral and is considered unsecured; in case of bankruptcy, the debenture holder is considered a general creditor. A debenture can be traded, and the term is often interchangeable with a bond. Debentures issued by governments are considered risk-free. See also: Treasury security.

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.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Debenture.

A debenture is an unsecured bond. Most bonds issued by corporations are debentures, which are backed by their reputation rather than by any collateral, such as the company's buildings or its inventory.

Although debentures sound riskier than secured bonds, they aren't when they're issued by well-established companies with good credit ratings.

debenture

An unsecured note or bond.