An unsecured bond or debt instrument backed only by the creditworthiness and reputation of the issuer, not by specific collateral. Companies issue debentures to raise capital for expansion or operations.
From Latin 'debentur' meaning 'they are owed,' from the phrase 'debentur mihi' (they are owed to me) used in medieval accounting. Originally appeared in English customs records in the 15th century as certificates of debt owed by the crown.
Unlike secured bonds backed by assets, debentures are essentially IOUs based on trust alone - which is why only companies with stellar credit ratings can issue them successfully. It's like lending money to a friend based purely on their word rather than holding their car keys as collateral!
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