Debenture

A long-term bond issued by large companies or governments paying a fixed rate of interest. In the UK this is usually secured on an asset although in other countries such as the US, debenture refers to an unsecured debt which is backed only by the reputation of the issuer rather than a physical asset or collateral. These are documented in agreements called indentures. Debenture holders are also preferential creditors in the event of a company going bankrupt ranking above holders of loan stock, preference shares and ordinary shares.

This definition is for general information purposes only