when debts are issued as debentures they may be registered to the issuer in this case the transfer or trading in these securities must be organized through a clearing facility that alerts the issuer to changes in ownership so that they can pay interest to the correct bondholder a bearer debenture in contrast is not registered with the issuer the owner bearer of the debenture is entitled to interest simply by holding the bond 
redeemable debentures clearly spell out the exact terms and date by which the issuer of the bond must repay their debt in full irredeemable non redeemable debentures on the other hand do not hold the issuer liable to repay in full by a certain date because of this irredeemable debentures are also known as perpetual debentures convertible debentures are bonds that can convert into equity shares of the issuing corporation after a specific period convertible debentures are hybrid financial products with the benefits of both debt and equity companies use debentures as fixed rate loans and pay fixed interest payments however the holders of the debenture have the option of holding the loan until maturity and receiving the interest payments or converting the loan into equity shares convertible debentures are attractive to investors that want to convert to equity if they believe the company s stock will rise in the long term however the ability to convert to equity comes at a price since convertible debentures pay a lower interest rate compared to other fixed rate investments nonconvertible debentures are traditional debentures that cannot be converted into equity of the issuing corporation to compensate for the lack of convertibility investors are rewarded with a higher interest rate when compared to convertible debentures features of a debenture