Debenture = Bonds =
When a business sources finance, they can issue debentures/bonds to the general public. Initially, these potential investors are provided with a prospectus/proposal outlining the terms of the debenture (in detail), including the interest made on this loan, frequency of repayments and the terms of contract.
Interest - Is generally proportional to the amount invested .. eg: $10000-$20000 investment may see a return of 6% per annum, while $20001-$30000 may see a return of 6.5% per annum
Frequency of Repayments - This is also determined by the investor, as generally a range of repayment plans are available. They can be paid quarterly, annually or as a lump sum upon maturity (eg 3 years time)
Ok, so youve loaned money to the business, so basically you're classed as "long term debt". The business repays you with interest in a specific time period, as per the arrangement of the debenture.
Hopefully thats Ok ... as mentioned earlier, a "bond" is the american equivalent, therefore when one talks about "international bonds" and "eurobonds" they basically mean "international debentures" and "euro..debentures" ..
edit: Just adding to that, its classed as a 'secured loan' meaning basically, as a mortgage is sucured against ones property for example, a debenture is ssecured against a companies assets (therefore firm closure = liquidation = repayment)
