Write the difference between debentures and bonds.

The major differences between debentures and bonds are as follows −


  • The instrument used to raise long term finances.

  • Issued by private companies.

  • Known as debenture holders.

  • Short term tenure.

  • Debentures = assets – (Liabilities + shareholders reserve+ Bonds).

  • They are both unsecure and secure in nature.

  • High risk.

  • Gives high interest rate.

  • Liquidity is done after bond holders.

  • Periodical payment structure.

  • Can be convertible to equity shares.


  • Instruments which highlights the debt taken towards the holders.

  • Issued by corporations, government agencies and financial institutions.

  • Known as bondholders.

  • Tenure is higher than debentures.

  • Bonds = assets – (liabilities + shareholders reserve + debentures).

  • They are secure in nature.

  • Less risk compared to debentures.

  • Gives you low interest.

  • Liquidity bonds paid first.

  • Accrued payment structure.

  • Cant convertible to equity shares.