Question

discussion debentures as a form fo terme financing for a company ?

Answer 1

Debentures can definitely act as a form of financing for company. It is normally an unsecured form of financing which is basically issued by the company to meet dedicated expenditure or expansion plan or for a specific project. Unlike bond which is issued sometimes to provide leverage to the capital structure debentures have dedicated needs but similar to bonds debentures are issued for normally more than 5 to 10 years, they pay coupon payment. They are rated by credit rating agencies and they provide an opportunity for an investor to diversify their portfolio in the debt form. Debentures for company provides an option to raise funds to meet the capital expenditure needs or project financing needs. Sometimes debentures are also used as a form of bridge financing.