Difference betwen debentures and bonds
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Answer / surinder kaur
Kamal is absolutely right. the difference is only with
regard to interest. in case of debenture interest is
received periodically but in case of bond interest is
accrued and IS RECEIVED ONLY AT THE TIME OF MATURITY.
| Is This Answer Correct ? | 5 Yes | 1 No |
Answer / aboo
bonds are issued by the governments so it is secured and it
has less interest than debentures, debentures are issued by
the corporations so they have greater risk than the bonds
and its having more interest rate.
| Is This Answer Correct ? | 3 Yes | 1 No |
Answer / akingbule bayonle stanley
bonds is a long term financial loan debt, which is secured
just because their is collateral security that will be
required. while in debenture it is only by the integrity of
the borrower, not by collateral, which makes it un secured
| Is This Answer Correct ? | 2 Yes | 1 No |
Answer / rohit kumar
bond is secured debt security issued by corporates while
debenture is unsecured. those companies are allowed only to
issue debenture who has trustworthy and fulfill some norms
issued by SEBI or government.
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / harshit purwar
Debentures are the first creditor of the company.At the
time of liquidation they get the second right after the
creditor having charged on fixed assets.They get the
interest @ fixed rate whether comany earn profit or not.On
debentures company get the benefit of tax.Bonds are just
like commercial paper.The company which issues is the
debtor and the person who buys is the creditor of that
company.Creditor will get interest periodically as per
agreement and the principle amount is received on
maturity.For issuing bond no prospectus is issued and no
trustees are appointed as in debentures for the sake of
debentures.
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / charu agrawal
bonds are much secured than debentures. whereas debenture is an unsecured loan,....secondly interest paid is higher to debenture holders compared to bond holders ....thirdly interest is paid periodically n in bond int is received only after maturity i.e outstanding....fourthly debentures may b convertible in equity whereas bond are not.....main ones r the first two points....
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / byju jacob
ONLY THE DIFFERENCE IS RISK AND GUD RETURN
=DEBNTRS, NO RISK WITH SMALL PROFIT
=BONDS ..............MAINLY BONDS BY GOV AND DBNTRS BY PRVT
SECTORS.........
| Is This Answer Correct ? | 0 Yes | 0 No |
Answer / saurav pathak
genarally private sector companies issues debenture and
public sector companies and also financial institutions
issues bonds the another dif is debentures may be
convertible into equity one while bonds are not
| Is This Answer Correct ? | 0 Yes | 0 No |
Answer / deepak singh
If we talk about the past, then the bonds and debentures are
taken as the same kind of sucurities. But now they have a
minor difference: as the bonds are mainly issued by the
public compnay and the debentures are issued by the corporate
sector thats why bonds are more secure than the debentures
but gets low returns as compare to debenture.
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Answer / nishi rani
Bonds and Debentures
Debt instruments can be further classified into the
following categories based on the different characteristics
with which they are floated in the market:
# Debentures
# Bonds
Debentures
Main characteristics
* They are fixed interest debt instruments with varying
period of maturity.
* Can either be placed privately or offered for
subscription.
* May or may not be listed on the stock exchange.
* If listed on the stock exchanges, they should be rated
prior to the listing by any of the credit rating agencies
designated by SEBI.
* When offered for subscription a debenture redemption
reserve has to be maintained.
* The period of maturity normally varies from 3 to 10
years and may also be more for projects with a high
gestation period.
Bonds may be of many types - they may be regular income,
infrastructure, tax saving or deep discount bonds. These
are financial instruments with a fixed coupon rate and a
definite period after which these are redeemed. The
fundamental difference between debentures and bonds is that
the former is normally secured whereas the latter is not.
Hence in general bonds are issued at a higher interest rate
than debentures. This avenue of financing is mainly availed
by highly reputed corporate concerns and financial institutions.
The three main kinds of instruments in this category are as
follows:
# Fixed rate
# Floating rate
# Discount bonds
* The bonds may also be regular income with the coupons
being paid at fixed intervals or cumulative in which the
interest is paid on redemption.
* Unlike debentures, bonds can be floated with a fixed
interest or floating interest rate. They can also be floated
without interest and are called discount bonds as they are
issued at a discount to the face value and an investor is
paid the face value on redemption.and if offered for longer
terms are known as deep discount bonds.
* The main advantage with interest bearing bonds is the
floating interest rate, which is stipulated based on certain
mark-up over stock market index or some such index.
* From the point of view of the investor bonds are
instruments carrying higher risk and higher returns as
compared to debentures.
* This has to be kept in mind while floating bond issues
for financing purposes. With the current buoyancy in capital
markets for equity instruments the demand for corporate
bonds is low.
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