debenture vs unsecured bonds

Discussion in 'Trading' started by jrkob, May 12, 2005.

  1. jrkob


    I am considering the purchase of some bonds.

    According to Euroclear's website, these bonds are "debenture".

    I did a search on Yahoo! and here's what I find:

    "debenture definition – A promissory note or bond backed by the credit and earnings history of a corporation and not secured by a mortgage or lien on specific property."

    Is there a difference between debentures and conventional unsecured bonds ? From the above definition alone I fail to see it.

    I know that when looking for a bond ticker, Bloomberg also makes the difference between debentures and unsecured bonds, so there must be a difference I guess.

    Thank you.
  2. zdreg


    bloomberg might have a different definition of debenture= a wider definition

    if you have access to bloomberg, you might write their help desk for an answer.

    from where in Europe are you trading?
  3. jrkob


    I am in Hong-Kong and unfortunately no longer have access to Bloomberg.
  4. "debenture" and "unsecured" mean the same thing. There's no difference--unless you see the term "subordinated debenture", which means the bond is not only unsecured, but it also only gets paid AFTER any and all regular debentures are paid.
  5. nitro


    A Debenture is an unsecured debt backed only by the credit worthiness of the borrower. Debentures have no collateral, and the agreement is documented by an indenture. The yields may vary from high to low depending on who backs the debenture.

    I am trading GM debenture. Here is a link to their IPO prospectus:

    Scroll down to section S-9 and it shows you the risks associated with (convertible) debentures in general.

  6. jrkob


    Fantastic, thanks a lot guys.

    Nitro this link is fantastic. I also found the info memo of the bond I am interested in. Very convenient.