Debenture

A debenture is a loan raised by a company, paying a fixed rate of interest and secured on the assets of the company.

Debentures are fixed interest securities in return for long-term loans, they tend to be dated for redemption between ten and forty years ahead of the date of issue. They may be secured by a floating charge on the company's assets or they may be tied to specific, named assets.

Debenture interest has to be paid by a company whether it makes a profit or not - if the debenture holders do not get paid they can legally force the company into liquidation to realise their claims on the company's assets.

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Last Updated: June 2007 © Moneyextra.com

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