Introduction

Why Companies Issue Debentures

A company raises part of its capital by issuing shares. But share capital alone is rarely enough to meet a company's long-term financial needs. To bridge this gap, most companies also raise long-term funds through debentures — either by placing them privately with select investors or by offering them to the public.

Funds raised through debentures are a form of long-term debt — unlike share capital, they represent money the company has borrowed, not money it owns.