A debenture is a type of long-term debt instrument, commonly used by corporations or governments. Unlike secured debt, which is backed by collateral, debentures are unsecured and rely solely on the borrower's integrity. This means that in the event of default, there is no specific asset that can be claimed by the lender. As a result, debentures are considered subordinate to secured debt, as they have a lower priority in the event of bankruptcy. This type of debt is often used for financing large projects or expansions, and it's important to understand its characteristics and risks before investing.
