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hi mike
what is the difference between a single debenture, debentures isssued as a series and debentures stock (requires a trust deed)
i also cannot understand what is meant by a trust deed.
thanks
Debenture stock is just another way of describing the loan – a bit like debenture warrants are just another way of describing them
If you borrow money from a single source – like a bank – that is a single debenture. It’s a one-off and the bank is happy enough to look after and administer its own investment
However if, as a public entity, you borrow money from hundreds / thousands of people, all at the same time, you would issue loan agreement documentation to them all confirming that they had lent the entity money.
But who’s going to look after and administer the rights and claims of all these people?
We’ll need a trust deed that appoints representatives titles “trustees”
So a trust deed is a document that appoints trustees to look after the interests of the many people that have lent money to the entity in a series of debentures
Is that clearer now?
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