Talk:Debenture/Archives/2012

Proposed merge

social security is the current means of credit for U.S debt Disagree Debenture has a very specific meaning in the United Kingdom in relation to the issuing of debentures to finance arts and sports venues, and in terms of debenture holders (eg for Wimbledon, Wembley Stadium and the Royal Albert Hall) who get tickets and other privileges (the Google search for debenture ticket gets 85,000 results [1]). This meaning is simply not covered by Bond (finance), and I certainly wouldn't think of looking there for information about it. Humansdorpie 09:06, 28 April 2006 (UTC)

Disagree - and in America (and most other places) a debenture is a particular type of bond - as explained in this article. I'll remove the "proposed merger" tag in a week if nobody objects.Smallbones 10:35, 28 April 2006 (UTC)

removed the tag. Smallbones 15:10, 5 May 2006 (UTC)

Clarification?

I'm trying to figure out what this sentence means: "The advantage of debentures to the issuer is they leave specific assets burden free, and thereby leave them open for subsequent financing." Could someone please clarify it? Specifically, the phrases "specific assets" "burden free" and "subsequent financing" sound like gobbledygook. Thanks. --RealGrouchy 21:43, 27 September 2007 (UTC)

i think it means that no assets will be secured with a debenture, allowing them to be secured in further financing transaction - I am aware that this might mean gobbledygook to you as well but neverthess........ —Preceding unsigned comment added by 150.101.164.220 (talk) 05:42, 11 December 2007 (UTC)

Thanks for the attempt; it's a step in the right direction.... what does it mean to secure an asset? Is that anything like collateral? -- RealGrouchy (talk) 23:19, 11 December 2007 (UTC)

I think reading through the Secured loan and Unsecured loan articles might help clarify things--and yes, it is about collateral. In the end, it has to do with determining the pecking order of creditors, in the case of bankruptcy. --MattiasAndersson (talk) 20:28, 24 December 2008 (UTC)

misleading

"A debenture is usually unsecured in the sense that there are no liens or pledges on specific assets. It is however, secured by all properties not otherwise pledged" The above is slightly misleading. if a debenture is not secured then it is UNsecured, and debenture holders will be an unsecured creditor, coming in front of preference and ordinary shareholders.

The above sentences is slightly misleading. I propose to change it if nonone objects.

11:31, 8 January 2009 (UTC)

...I think it is misleading. Plus is the definition slightly different between US & UK?

US definitions say "A long-term, unsecured debt instrument."

But in UK the debenture creates the security either "fixed" charge over specific assets, or "floating" charge over all other assets/property, or both. —Preceding unsigned comment added by 217.206.215.194 (talk) 11:31, 8 January 2009 (UTC)

It is more than misleading; it's wrong. A debenture is UNSECURED -- there are no assets or line of income to ensure that the bondholders will receive repayment of face value upon the bond's maturity. If a company goes bankrupt, for instance, debenture holders are treated differently (lower on the chain to recoup their money) from secured bondholders. Secured vs. unsecured bonds is the primary characteristic used to distinguish and categorize corporate bonds. ask123 (talk) 15:10, 23 June 2009 (UTC)

Difference between Debenture and a Bond

Though the article currently says "In practice the distinction between bond and debenture is not always maintained. Bonds are sometimes called debentures and vice-versa." The distinction between the two is not clearly drawn (for the intelligent general reader). Perhaps a paragraph describing the difference would be useful for non-finance types.Kevin Purcell (talk) 23:55, 9 May 2009 (UTC)

A Debenture is a type of corporate bond. Bonds come in many varieties. Debentures are unsecured corporate bonds. Corporate bonds may be secured (by assets or a line of income) or unsecured. Unsecured corporate bonds are called "debentures" or "notes." ask123 (talk) 15:04, 23 June 2009 (UTC)

Debentures are bonds NOT secured by any assets or income

Debentures are corporate bonds that are NOT secured by any assets or line of income. This article said the opposite, that debentures are debt that IS secured by assets. This is wrong! Well, I just changed it, but I'm surprised that the mistake went unnoticed for so long! ask123 (talk) 15:02, 23 June 2009 (UTC)

What is your authority for that? Please provide a citation from reliable sources. The top Google result says the opposite: http://www.companylawclub.co.uk/topics/faq072.htm. I think I will have to revert your edit. - Fayenatic (talk) 14:01, 8 September 2009 (UTC)

Source? I thought the fact was so basic as to be considered "general knowledge." And, when writing research papers, "general knowledge" doesn't need to be sourced. But, if you insist on one, you can check any business school text book or text material for the F.I.N.R.A. Series 7 Test (which covers the myriad of financial instruments including all types of corporate bonds). Debentures are NOT secured by assets. They are the opposite of secured bonds. That's why liquidation rights flows in the following order: (1) Wages, (2) Taxes, (3) Secured Creditors (including Secured Bond holders), (4) General Creditors (including Debenture holders), (5) Subordinate Creditors (including Subordinated Debenture holders), (6) Preferred Stockholders and (7) Common Stockholders. Secured bonds are backed by assets plus the full faith and credit of the issuer. Debentures are not backed by assets but, rather, only by the full faith and credit of the issuer. And Subordinate Debentures are also only backed by the full faith and credit of the issuer (not by any assets) but have a junior claim to regular debentures on the company in the case of liquidation. In the case of default (not liquidation, but default), however, Debentures and Subordinate debentures have no claim on assets. They only have claim in the case of liquidation -- as do all holders of securities in the aforesaid categories. When a company goes out of business, claim is assigned in the order I mentioned above, which, by the way, isn't random. Notice how the Secured Bonds come before the Debentures. That's not arbitrary. It's because the assets that back secured bonds make them more valuable. ask123 (talk) 19:17, 8 September 2009 (UTC)

"FINRA" - so presumably you are in the US. Your advice indicates that the US usage of "debenture" means an unsecured bond. However, this article is not just about debentures in the USA. We need to present a worldwide view. - Fayenatic (talk) 13:43, 9 September 2009 (UTC)

I have clarified this in the first paragraph and removed the "Disputed" tag. - Fayenatic (talk) 13:53, 9 September 2009 (UTC)