Types of Debentures

There are a number of different types of debentures depending upon their tenure, their convertibility, their security and their transferability. The classification of the debentures can be done as redeemable, irredeemable, perpetual, convertible, non-convertible, fully and partly secured, naked, first or second mortgage, fixed or floating rate, callable, putt able and zero coupon debentures.

According to their types different debentures have different characteristics that are completely different from the others. For example the redeemable debentures have a specific date of redemption on their certificate. On the other hand the non redeemable debentures that are also called as perpetual debentures don’t have any date of redemption on their certificate. In the same way the convertibles debentures can be converted in to equity shares on the demand of their holders. However the non convertible debentures cannot be converted into any other form. The rate of conversion of these debentures is mentioned in the terms and condition agreement. Similarly there are secured and unsecured kinds of debentures. The secured debentures are those which are backed by the assets or any other property of the issuer. On the other hand the non-secure kind of debentures is those which are not backed up by the assets or property. Unsecured debentures are also known as naked debentures. Secured debentures are further divided into two categories and these are the first mortgage debentures and the second mortgage debentures. Another category of debentures is the registered or unregistered debentures where in registered debentures the name, address and other details are hold with the issuing company at the time of issuing of debentures.



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