Debenture, bond or note: what you hold when you lend money to a company
A debenture is a written promise by a company to repay money it has borrowed, usually with interest. Bonds and notes work the same way: each is an IOU from the company to you. You get a fixed amount of interest and your money back at the end, as long as the company can pay.
This is general information, not financial or legal advice. It quotes no rates. GetBackedBy's own notes, with their current terms, are on its Invest & Borrow page.
What a debenture means, in plain words
A debenture is a debt. You do not own any part of the company and get no vote. You have a claim: the company owes you the interest it promised and the sum you lent.
The word has two uses, which is why it confuses people.
- In Singapore's companies and securities law, "debenture" is a broad label. It covers debenture stock, bonds, notes and other debt securities a company issues, whether or not they are secured on its assets.
- In banking, a debenture often means the document a company signs to give a bank a charge over its assets as security for a loan. If the company fails, the bank can look to those assets first.
The Monetary Authority of Singapore (MAS) says the largest part of the local corporate debt market is corporate debentures, which it describes as negotiable, unsecured debt securities. So in Singapore, a debenture you invest in is often unsecured.
Debentures, bonds and notes compared
The three words overlap a lot. For any of them, ask who owes you, what backs the promise, and whether you can get out early.
| Word | What it usually means | What to check |
|---|---|---|
| Debenture | A company's written promise to repay a debt. In banking, also a charge over the company's assets | Secured or unsecured, and who ranks first if the company fails |
| Bond | A debt security from a government or company, with a coupon and a maturity date | The issuer's ability to pay, and the price if you sell early |
| Note | Often a shorter or privately arranged debt, such as a medium-term note | The agreement itself: term, interest, and whether it can be sold or ended early |
Outside a market, a note is simply whatever its agreement says.
How bonds work
MoneySense, the national financial education programme, calls a bond "a debt security, in plain terms, an IOU". You lend to the issuer, a government or a company. Most bonds pay a regular coupon, a percentage of the face value. The principal comes back on the maturity date.
An invented example: a bond with a face value of 10,000 and a coupon of 4% a year pays 400 a year, and 10,000 at the end. Sell before then and you get the market price, which could be more or less. MoneySense says "when rates rise, bond prices typically fall, and vice versa", and longer bonds move more.
What fixed income is
Fixed income is the family these all belong to, with fixed deposits, T-bills and government bonds. It is called fixed because the rate, the schedule and the end date are set in advance. Whether the payments arrive still depends on whoever promised them.
Equity, meaning shares, is ownership, with no promised payment. If a company is wound up, MoneySense says, "bondholders rank ahead of shareholders but behind secured creditors".
What can go wrong
MoneySense lists these risks for bonds, and most apply to any loan to a company:
- Credit risk. The issuer fails to pay, and "you may recover nothing, or only a fraction of your investment."
- Interest rate risk. Rates rise and the price of what you hold falls.
- Liquidity risk. Corporate bonds can trade rarely, so selling is slow or costly.
- Call risk. Some issuers can repay early, which stops your interest.
- Inflation risk. A fixed payment may not keep up with prices.
MoneySense calls credit ratings "opinions, not guarantees". It suggests reading the issuer's latest annual report, and comparing a bond's yield with what Singapore Savings Bonds offer at the time.
How this differs from a bank deposit
Deposit insurance covers Singapore-dollar savings, current and fixed deposit accounts at full banks and finance companies, which must all be members. The cover is up to one hundred thousand dollars per depositor at each member (read on 9 November 2026). Bonds are "not deposit-insured", says MoneySense, and nor are company notes or debentures. If the company cannot pay, no scheme steps in. Our guide to passive income in Singapore sets deposits, T-bills, bonds and notes side by side.
What a GetBackedBy note is
A GetBackedBy note is money you lend to GetBackedBy Pte. Ltd. for a fixed term at a fixed return. It is an obligation of the company. It is not a bank deposit, it is not covered by deposit insurance, and your capital is at risk, so you can lose some or all of what you place.
The note agreement sets out the rest:
- It is an unsecured debt of the company. You hold no security over the company's loans to other people.
- Interest is simple, not compound, and builds up day by day. You can take it out along the way above a set minimum, or with the principal at the end.
- Each remittance has its own payment reference, and the term starts when the money is confirmed.
- The principal stays in until the term ends. There is no right to end a note early, unless the company agrees in writing.
- It is not a listed security, so there is no market to sell it on, and it can be passed to someone else only with the company's consent.
So a note is closer to a private loan to the company than to a listed bond. Its payout is known from the start and does not move with market prices. You cannot sell out, though, and everything rests on the company paying.
Four checks before you lend to any company
- Who exactly owes you, and is the debt secured?
- Who is paid before you if the company fails?
- Can you get out before the end, and at what cost?
- Is the interest simple or compound, and when is it paid?
You can look a firm up in MAS's Financial Institutions Directory and check its Investor Alert List, which MAS says is not exhaustive.
To compare a note with a fixed deposit and a T-bill at rates you type in, open Note vs fixed deposit vs T-bill in the free Money tools.
Questions
What is a debenture in simple terms?
It is a company's written promise to repay money it borrowed, usually with interest. The holder is a lender, not an owner. In banking the word can also mean the document that gives a lender a charge over a company's assets.
What is the difference between a debenture and a bond?
In Singapore law "debenture" is the wider label, and it includes bonds and notes. In everyday use, a bond is a debt security with a coupon and a maturity date, while a debenture can also mean a secured charge given to a bank.
What is the difference between a debenture and a loan?
A loan usually comes from one lender, such as a bank, under a loan agreement. A debenture is a debt instrument a company issues, often to many investors at once. A bank loan to a company is often backed by a debenture, which gives the bank its security.
Why would a company issue a debenture?
To raise money without selling part of the company, so the owners keep control and the cost is set in advance. In return it must pay on time, whether it is doing well or not.
Is fixed income good or bad?
It is neither in itself. It suits money you want a set return on for a set time, and gives up the larger gains shares can bring. How safe it is depends on who owes you.
Are corporate bonds 100% safe?
No. A company can default, and holders may get back only part of their money or nothing. Corporate bonds are not deposit-insured, and their price can fall if you need to sell early.
What is fixed income vs equity?
Fixed income is lending: you are owed set payments and your money back. Equity is ownership through shares, with a share in gains and losses and no promised payment.
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