• Secured Debentures: These are secured by a charge on the fixed assets of the issuer. So if the issuer defaults on payment of either the principal or the interest amount, the issuer's assets can be sold to repay the liability to the investors.

• Unsecured Debentures: These are unsecured in the sense that if the issuer defaults on payment of the interest or principal amount, the investor has to be paid along with the other unsecured creditors of the company.