THINGS TO CONSIDER BEFORE INVESTING IN DEBENTURES OR LOAN STOCKS.

Debentures and loan stocks are not same as common or ordinary shares.They are basically debt instruments issued by companies or goverments in order to make use of the investors money which will be repaid with cash or shares on a given date.
Always put the following into consideration before investing in debentures or loan stock.
1. Interest rate - Debentures pay interest that can be fixed,floating or payable at maturity.You need to be confident that the interest rate would remain competitive during the tenor of the debenture before you invest.
2. Credit risk - This refers to the ability of the company or government agency to make timely payments of the interest and principal (actual amount borrowed) to the investor.Borrowers are now required by law to obtain a rating from rating agencies.The rating serves as a good measuring stick for the safety of the debenture.Please avoid investing in debentures with poor ratings.
3. Maturity - This refers to the specific future date on which the investor's principal will be repaid.Debentures or loan stocks that can be paid by the company or government agency are called redeemable debentures while debentures that cannot be paid but rather converted into shares at maturity are called convertible debentures.
I hope the above tips will be helpful.