whats the difference b/w debenture and bonds?
AFAIK, a bond is an agreement between people or companies, where one is a lender and the other is a borrower, and the lender lends money with the assurance from the borrower that principal and some interest will be paid, after a certain period of time. And I think this interest can be paid at regular intervals or even at the end when the agreement is finished.
And there are different types of bonds, commercial paper, certificate of deposits, debentures, non convertible debentures etc. Some are secured, some unsecured, some can be converted to equity, some cannot be converted to equity etc.
Debenture as per Value Research Online - A loan with the promise to repay the principal on maturity and pay an interest. These are issued by financial institutions and companies to raise capital. They may be secured against specific assets of the issuer.
1 Like
2 Likes
Most of the difference listed in this article are either not fully correct or completely wrong. Do not go by this article Please.
From Indian market perspective - mainly 2 types of debentures - Convertible and Non Convertible (NCD)
Practically terms NCD and bonds are used interchangeably and there is no real difference between two.
Convertible debentures are slightly complex instruments which are bonds, but can be converted to equity in certain scenarios.