Everything you need to know about Debentures

Debentures are debt securities issued by companies that guarantee remuneration to their holders . 

They are a way of raising funds in the capital market for different objectives, such as investments, reinforcing cash and paying other debts.

Types of Debentures

Simple : Your profitability can be pre-fixed or post-fixed. The return is made simply, using capital plus interest and in local currency.

Convertible : Bonds allow income to be converted into shares of the issuing institution.

Exchangeable : Earnings can be converted into shares of any company, not exclusively the issuer of the securities.

Incentivized : Generally issued by companies that carry out infrastructure projects for the benefit of the population. They are guaranteed by the government as a way of encouraging works .

Advantages of Debentures 

Investments involving debentures present advantages for both sides involved: both for the institution that issues the debt securities and for the investor who makes the acquisition.

Debenture Costs and Fees

Generally, the costs of debentures arise from intermediation and custody fees, which are usually charged by the broker. In addition, Income Tax is also charged.

Conclusion 

Debentures are a fixed income investment option that offer future interest, based on the maturity date, when the investor receives the amount invested plus the reported yield. However, it is important to remember that, like any investment, debentures also involve risks that must be considered by investors.