Subordinated debt


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Related to Subordinated debt: Mezzanine debt

Subordinated debt

Debt over which senior debt takes priority. In the event of bankruptcy, subordinated debtholders receive payment only after senior debt claims are paid in full.

Junior Debt

A class of debt that, in the event of insolvency, is prioritized lower than other classes of debt. The most common kind of junior debt is an unsecured loan, which has no collateral. Another kind of junior debt is a secured loan in which another loan has priority on the collateral; a second mortgage is an example of a secured junior debt. This class of debt carries higher risk but also pays higher interest than other classes.

Subordinated debt.

Subordinated debt generally refers to debt securities that have a secondary or lesser claim to the issuer's assets than more senior debt, should the issuer default on its obligations.

In fact, there are also levels of subordinated debt, with senior subordinated debt having a higher claim to repayment than junior subordinated debt.

References in periodicals archive ?
In this context, it is worth highlighting that Fitch's ratings for GCC banks' subordinated debt often factor in a high probability that sovereign support will be available for this debt class if and when required.
The proceeds from the subordinated debt will be used to support the ongoing implementation of PrivateBancorp's Strategic Growth Plan.
The inter-creditor agreement describes the handling of major items such as: a) cross-acceleration; b) blockage of the subordinated debt interest; c) subrogation; and d) bankruptcy rights.
It included a term loan for 84 per cent of the purchase price and associated expenses and subordinated debt for the remainder.
The agencies monitor subordinated debt yields and issuance patterns in evaluating the condition of large depository institution organizations.
Investments usually take the form of senior secured loans, junior secured loans, subordinated debt investments - which may contain equity or equity-related instruments.
The purpose of Moody's ratings review is to assess the evolving risk profile of these subordinated debt instruments given (i) the recent global and prudential trends towards imposing losses on junior creditors in the context of government support, and (ii) the implementation of Basel III, which will require Tier 2 instruments to have 'loss absorption' features.
One of the key advantages of subordinated debt is that, in most cases, bankers will treat the remaining portion of sub-debt as equity when calculating debt/equity ratios.
The study begins by carefully defining market discipline, discusses the motivation for and theory behind a subordinated debt policy, and presents an extensive summary of existing policy proposals.
All the four Tunisian leasing companies' rated subordinated debt issues are Lower Tier 2 issues.
Despite its increasing use, however, subordinated debt remains one of the least understood forms of financing currently available.
has upgraded its rating of Banc One Corporation's subordinated debt to "AA" from "AA-," adding Banc One to a select but growing number of U.