Debentures and Bonds

Debentures and Bonds both are debt instruments which are issued to raise funds. One who purchase this instrument will be the creditor or loan giver and issuer will be debtor or loan taker. Debentures used to raise funds by companies and they will give fixed rate of interest. These instruments are purchased on the basis of their credit ratings. Some types of debentures can be converted in to shares by the company. companies will issue debentures for the purpose of raising the fund. Bonds are debt instruments which are secured issued by government, corporates to raise the funds. Bonds has the Asset as the security. Bonds will pay interest as the return to bond buyer. The bond issuer will be the loan taker and bond purchaser will be the loan giver.