debenture

debenture , document acknowledging indebtedness. In Great Britain a debenture is practically the same as a bond , and debenture stock is similar to preferred stock. In the United States the term is usually employed for a corporation certificate without special security, such as a mortgage, to back it up. Debentures are generally issued by service corporations that have few mortgageable assets, or by blue-chip companies that are stable enough to invite unsecured loans. In a typical debenture, the corporation promises to repay the principal either periodically or on a specified date, and with regular interest. The term is also used for a document by which a government is bound to pay a creditor money due after some condition has been fulfilled.

debenture voucher for a sum due XV; †certificate of a loan made to a government XVIII; bond issued by a corporation acknowledging indebtedness for interest XIX. mod. use of L. dēbentur are owing or due, 3rd pl. pres. ind. pass. of dēbēre owe (see DEBT), occurring as the first word of a certificate of indebtedness (XIV); there has been assim. of the final syll. to -URE.

de·ben·ture / diˈbenchər/ • n. (also debenture bond) an unsecured loan certificate issued by a company, backed by general credit rather than by specified assets.