Debentures

What is a Debenture?

Debentures are debt securities or investments. It is a kind of loan for companies that issue them.

They are a fixed Income investment with the potential for good return. Debentures can be an excellent option for any portfolio, especially for those seeking diversification..

Simply put, it works as follows:

• A company needs a certain amount of money to invest in business expansion or even pay off debts.

• Instead of looking for a loan at the bank (with higher costs), it launches debentures on the market to raise funds.

• A person who is interested can buy a debenture and, in return, receive interest on the money invested in the company. Basically, it is as if the person who invested became a creditor of the company, that is, the company would be in debt to him.

What are the types of debentures?

Let's learn a little more about debentures. Now that you already know the concept and what debt security is about, let's show what types exist in the current market. Check it out: