Perpetual debenture definitions
| Word backwards | lauteprep erutnebed |
|---|---|
| Part of speech | Perpetual debenture is a noun phrase. |
| Syllabic division | per-pe-tu-al de-ben-ture |
| Plural | The plural of perpetual debenture is perpetual debentures. |
| Total letters | 18 |
| Vogais (3) | e,u,a |
| Consonants (7) | p,r,t,l,d,b,n |
Perpetual debentures are a type of long-term debt instrument issued by companies to raise funds from the public. Unlike regular debentures that have a fixed maturity date, perpetual debentures have no maturity date, meaning they do not need to be repaid by the company. Instead, the company pays regular interest to debenture holders for an indefinite period.
Features of Perpetual Debentures
One key feature of perpetual debentures is that they pay a fixed rate of interest to debenture holders. This interest is typically paid on a semi-annual or annual basis. Additionally, perpetual debentures do not require the company to repay the principal amount, making them a more flexible form of financing for companies.
Advantages of Perpetual Debentures
Perpetual debentures allow companies to raise funds without the obligation of repayment, which can be particularly beneficial for companies with uncertain cash flows. Additionally, perpetual debentures help improve the company's debt-equity ratio, as they are classified as long-term debt on the company's balance sheet.
Disadvantages of Perpetual Debentures
One potential drawback of perpetual debentures is that they may have a higher cost of capital compared to other forms of debt, such as bank loans. This is because investors will often require a higher rate of return to compensate for the fact that the principal amount will not be repaid. Additionally, perpetual debentures can be more complex to issue and administer than other forms of debt.
Conclusion
Perpetual debentures can be a useful financing option for companies looking to raise long-term capital without the obligation of repayment. However, it is important for companies to carefully weigh the advantages and disadvantages of perpetual debentures before deciding to issue them.
Perpetual debenture Examples
- The company issued a perpetual debenture to raise long-term capital.
- Investors were attracted to the perpetual debenture due to its consistent returns.
- The perpetual debenture had a fixed interest rate that was paid out annually.
- The company's perpetual debenture was secured by its assets.
- The perpetual debenture holders were entitled to receive regular interest payments.
- The perpetual debenture had no maturity date, making it a long-term financing option.
- Investors were wary of the perpetual debenture's lack of redemption date.
- The perpetual debenture was listed on the stock exchange for trading.
- The company's financial stability was in part due to its perpetual debenture.
- The perpetual debenture was a popular choice for income-seeking investors.