Because of the legal problems associated with specific asset claims in a secured bond offering, the trend is for companies to issue more debentures.

Question

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Secured bond offerings require companies to specifically identify and pledge assets as collateral, which can lead to legal complications in the event of default. Therefore, companies are increasingly turning to debentures, which do not require specific asset pledges and are backed by the company's overall creditworthiness.

Because of the Legal Problems Associated with Specific Asset Claims