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Information > Financial Terms > This page Debenture Bonds Bonds
without any security other than the general assets and credit of the issuer,
Government, state, and municipal bonds, i.e., all civil bonds, are by
definition debenture bonds since they are not secured by mortgages or
any other specific pledge of assets.
Notwithstanding this fact, civil bonds represent the highest class
of investments because their payment rests upon the taxing power and general
credit. Debenture
bonds issued by corporations are, as a class, not considered high-grade
investments, although where the general credit of the issuer is strong,
they may command a high position.
Their strength depends upon the equity in the general assets, the
extent of bond issues having prior liens, range of fluctuation of earnings,
and margin of average earnings over prior charges.
Debenture bonds are sometimes known as plain debentures.
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