Debenture definition

A debenture is a debt security that a company or government issues to borrow money from investors. The issuer agrees to pay interest over the term and repay the principal at maturity.

A debenture is usually unsecured, which means no specific asset is pledged against it. Investors lend on the strength of the issuer's credit and cash flow rather than on a claim over property, and the interest rate can be fixed or variable.

A debenture differs from a secured bond. A secured bond is backed by a specific asset the holder can claim if the issuer defaults; a debenture has no such backing, so its holders rank behind secured creditors and usually want a higher interest rate to accept that risk. In US usage the word sometimes describes an unsecured corporate bond in particular.