Difference between Debentures and Bonds

Distinguish, differentiate, compare and explain what is the difference between Debentures and Bonds. Comparison and Differences.

Differences between Debentures and Bonds

S.No. Debentures Bonds
1 Debentures are mostly issued by private companies. Bonds are issued by financial institutions, government agencies and large corporations.
2 A debenture investment is for short term. The investment tenure for bonds is for long term.
3 Interest payment happens on a periodical basis, which is often dependent on the company's performance. Payment of interest in bonds is on accrual basis. They are paid monthly, semi-annually and annually.
4 Debenture investment has high risk. People generally invest due to the reputation of the company. Bonds have low risk.
5 It is not secured by collateral. It is secured by collateral.
6 Offers high rate of returns, since it is not backed by collateral. Offers low rate of interest, as it is backed by collateral.
7 There are convertible debentures that allow the holder to convert these into shares, if they believe it has a potential to generate profits in future. Bonds cannot be converted to equity shares.
8 Debenture holders will be paid after bond holders, in case the company shuts down. In case of liquidation of an organisation, the bond holders will be paid first, followed by the debenture investors.


Difference between Bonds vs Debentures

Debentures vs Bonds

Differences between Bonds vs Debentures

Spreading Knowledge Across the World

USA - United States of America  Canada  United Kingdom  Australia  New Zealand  South America  Brazil  Portugal  Netherland  South Africa  Ethiopia  Zambia  Singapore  Malaysia  India  China  UAE - Saudi Arabia  Qatar  Oman  Kuwait  Bahrain  Dubai  Israil  England  Scotland  Norway  Ireland  Denmark  France  Spain  Poland  and  many more....