subordinated debenture

Subordinated Debenture Bond

A class of unsecured bond that, in the event of liquidation, is prioritized lower than other classes of debt. In essence, a subordinated debenture bond is an unsecured loan, which has no collateral. Should the issuer be liquidated, all other bonds and debts must be repaid before the subordinated debenture bond is repaid. This class of debt carries higher risk, but also pays higher interest than other classes. It is a type of junior debt.

subordinated debenture

An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before holders of subordinated debentures can receive a settlement. Frequently, this settlement amounts to relatively little. Because of the risk involved, the issuers have to pay relatively high interest rates in order to sell these securities to investors. Many issues of these debentures include a sweetener such as the right to exchange the securities for shares of common stock. The sweeteners are included so that interest rates on the subordinated debentures can be reduced below the level that would be required without them. Subordinated debentures without the conversion option appeal to risk-oriented investors seeking high current yields. See also convertible security.
References in periodicals archive ?
also intended a refinancing when it toasted the new year with a $150 million, 9 3/4-coupon senior subordinated debenture, but for different reasons.
Global Banking News-December 2, 2014--Manulife completes subordinated debenture offering
60% junior subordinated debenture due May 15, 2037 'A-'.
M2 EQUITYBITES-November 29, 2016-DTE Energy Company redeems junior subordinated debentures
Global Banking News-October 27, 2015--CWB to redeem USD300m of subordinated debentures
UN) (NYSE:HTE), a Canada-based oil and gas royalty trust that acquires, develops, produces and sells oil and natural gas, has announced a normal course issuer bid for repurchase of the trust units and subordinated debentures.
175% Series A-6 Junior Subordinated Debentures which have been registered under the Securities Act of 1933 ("New Junior Subordinated Debentures") for all of its outstanding unregistered 8.
Equipment rental company United Rentals Inc (URI) (NYSE:URI) announced on Tuesday its plans for a partial redemption of convertible quarterly income preferred securities issued by its subsidiary (the Trust) and convertible subordinated debentures.
New York City time, on June 17, 2009, $2,232,338,000 principal amount of Old Junior Subordinated Debentures and $2,280,308,000 principal amount of Old Notes had been tendered and not withdrawn.
s (TRV) planned issuance of $1 billion of junior subordinated debentures due 2037.
03% Subordinated Debentures due February 28, 2017 of Morgan Stanley Finance plc, and 65,810 related purchase contracts of Morgan Stanley.
0% Subordinated Debentures in the aggregate principal amount of approximately $36 million and 8.