A debenture is classified as a marketable security. It is a type of investment. Businesses and other firms issue debentures to accumulate money for long-term processes and development. Since a debenture is a debt, companies calculate it as a debt on the balance sheet of the company that issues the debenture.

Large and renowned businesses especially benefit from debentures. When a company flaunts a triple A credit rating, it can issue debentures due to its creditworthiness. Here, companies with a good status use their privileges and borrow money, unsecured and without repercussions.

The issue consists of a legal certificate that mentions the amount of money provided by the investor, the interest rate and the payment plan. Hence, after a lender provides a loan, usually with a fixed interest rate, security measures can be taken. Here, the lender obtains security for the borrower’s assets. Therefore, the lender would be safe, even if the latter is unable to settle the loan.

Debentures can be put in place quite easily and it only takes a few days. Given below are some features of debentures.

• Borrowed Funds
• Fixed-rate of Interest
• Compulsory Payment of Interest
• Security
• Redemption
• No voting Rights
• Appointment of Trustee
• Convertibility