debenture

1. A certificate or voucher acknowledging a debt.
2. An unsecured bond issued by a civil or governmental corporation or agency and backed only by the credit standing of the issuer.
3. A customhouse certificate providing for the payment of a drawback.

[Middle English debentur, from Latin dēbentur, they are due (probably the first word appearing on certificates of indebtedness), third person pl. passive of dēbēre, to owe.]

A type of debt instrument that is not secured by physical asset 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.

Investopedia Says:
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.

Related Links:
Gain insight into the functions of the U.S. Treasury. We look at how and why it issues debt. What Fuels The National Debt?
Here we explain how to evaluate whether a company's debt will pose a threat to investors. When Companies Borrow Money
Investing in bonds - What are they, and do they belong in your portfolio? Bond Basics Tutorial
For investors considering buying debt securities, a credit rating is an essential tool. What Is A Corporate Credit Rating?

An unsecured Note or Bond.
Example: Abel invests in debentures of the XYZ Corporation; Baker invests in a First Mortgage on a building owned by XYZ Corporation. The XYZ Corporation Bankrupts. Ultimately Baker receives full payment for the mortgage upon the Foreclosure Sale. Abel is a general creditor and receives only 18 cents per dollar owed to him.

Long-term debt instrument that is not secured by a mortgage or other lien on specific property. Because it is unsecured debt, it is issued usually by large, financially strong companies with excellent Bond Ratings. There are two kinds of debentures: a senior issue and a subordinated (junior) issue, which has a subordinate lien. The order of a prior claim is set forth in the bond Indenture. Typically, in the event of liquidation, subordinated debentures come after senior debt.

[Latin, Are due.] A promissory note or bond offered by a corporation to a creditor in exchange for a loan, the repayment of which is backed only by the general creditworthiness of the corporation and not by a mortgage or a lien on any specific property.

Debentures are usually offered in issues under an indenture, a document that sets the terms of the exchange. A debenture is usually a bearer instrument. When it is presented for payment, the person in possession of it will be paid, even if the person is not the original creditor. Coupons representing annual or semi-annual payments of interest on the debt are attached, to be clipped and presented for payment on their due dates. They may be deposited in, and collected by, the banks of holders of the debentures, the creditors of the corporation.

A convertible debenture is one that can be changed or converted, at the option of its holder, into shares of stock, usually common stock, at a fixed ratio as stated in the indenture. The ratio can be adjusted in light of stock dividends; otherwise the value of converting the debt into securities would be worth less than retaining the debenture until its date of maturity.

A subordinate debenture is one that will be repaid only after other corporate debts have been satisfied.

A convertible subordinate debenture is one that is subject or subordinate to the prior repayment of other debts of the corporation but which can be converted into another form of security.

A sinking fund debenture is one whereby repayment is secured by periodic payments by the corporation into a sinking fund, an amount of money made up of corporate assets and earnings that are set aside for the repayment of designated debentures and long-term debts.

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

Dansk (Danish)
n. - obligation, partialobligation

Nederlands (Dutch)
obligatie, mandaat tot restitutie van douanerechten

Français (French)
n. - certificat de drawback (douanes), (Fin) obligation, bon

Deutsch (German)
n. - Obligation, Schuldverschreibung

Ελληνική (Greek)
n. - (οικον.) μακροπρόθεσμο εταιρικό ομόλογο ή ομολογία σταθερού επιτοκίου

Italiano (Italian)
obbligazione

Português (Portuguese)
n. - debênture (m)

Русский (Russian)
вексель

Español (Spanish)
n. - obligación, bono o pagaré con interés fijo

Svenska (Swedish)
n. - skuldsedel, skuldebrev

中文（简体）(Chinese (Simplified))
公司债券, 退税证明书

中文（繁體）(Chinese (Traditional))
n. - 公司債券, 退稅證明書

한국어 (Korean)
n. - 채무 증서, 회사채, 무담보 회사채

日本語 (Japanese)
n. - 負債証書, 社債, 社債券

العربيه (Arabic)
‏(الاسم) قيد التزام بدين ( يمثل قيمه قرض منح من شركه مثلا بفائدة محددة لحين سداده)‏

עברית (Hebrew)
n. - ‮איגרת חוב‬

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