A legal agreement that reflects or covers a debt obligation or other types of obligations (e.g., purchase obligations). It is a legally binding contract, often entered into between a bond issuer and bondholders. It also refers to an instrument used for commercial debt or real estate transaction.

Generally, it is a written agreement between the issuer of debt securities (such as bonds, notes, or debentures) and the representative of security holders (the trustee) in relation to such securities. The agreement defines and outlines the terms and conditions of the debt securities, including the interest rate, methods of payment, maturity, any redemption terms, timing, and any covenants, action in the event of default, and any other mutually negotiated terms and conditions (e.g., the duties of the issuer and the trustee).

For a debenture, it denotes a legal certificate that sets out how much money an investor put forth (principal) in the instrument, the interest rate to be paid and the payment table. Investors are paid back their principal when the debenture matures. The borrowing business typically only pays the interest (a percentage of the principal or face value of the certificate, or the borrowed amount) during time to maturity and then repays the full principal when the certificate matures.