Debenture, Financial Management

Debenture

A kind of debt instrument that is not secured by physical any asset or collateral is known as debenture. Debentures are backed by the general creditworthiness and status of the issuer. Both corporations and governments often issue this kind of bond so as to secure capital. Like other kinds of bonds, debentures are documented in an indenture.  

Bond buyers usually buy debentures on the basis of the belief that the bond issuer is unlikely to default on the repayment. An illustration of a government debenture would be any government-issued Treasury bond (T-bond) or Treasury bills (T-bill). T-bonds and T-bills are usually considered risk free as governments, at worst, can print off more money or elevate taxes to pay these kinds of debts.

 

 

Posted Date: 7/25/2012 7:57:42 AM | Location : United States







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