what is debentures

Answer Posted / business

Debentures are the important instruments for raising long
term debt capital . A company can raise fund through issue
of debentures , which bear a fixed rate of interest.
The debenture issued by a company is an acknowledgement that
company had borrowed a certain amount of money , which it
promise to repay at a future date . Debenture holder's are
therefore termed as creditors of the company . Debentures
holders paid a fixed stated amount of interested at
specified intervals say six months or one year . Public
issue of debentures requires that the issue be rated by a
credit rating agency like CRISIL on aspect like track record
of the company , its profitability , debt service capacity
etc ..

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