Subordinated


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Subordinated

A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt.

Subordinated

Describing a class of security that, in the event of liquidation, is prioritized lower than other classes of security. For example, a subordinated security may be an unsecured loan, which has no collateral. Should the issuer be liquidated, all secured bonds and debts must be repaid before the subordinated security is repaid. A subordinated security carries higher risk but also pays higher returns than other classes. See also: Junior Debt.
References in periodicals archive ?
Subordinate NYCMWFA SRF bonds, including the series 2018B bonds are secured by subordinate-lien NYCMWFA repayment obligations, moneys available from time-to-time in the general reserve fund, and, on a subordinated basis, releases from certain other EFC programs.
As of April 20, 2018, EUR12,350,000 worth of the series A-7 junior subordinated debentures were outstanding and GBP5,500,000 worth of the series A-8 junior subordinated debentures were outstanding.
Finally, EUR12.4m principal amount of the series A-7 junior subordinated debentures were outstanding and GBP5.5m total principal amount of the series A-8 junior subordinated debentures were outstanding, as of 20 April 2018.
The Senior Notes and Subordinated Notes are being offered under separate prospectus supplements.
The primary driver for the downgrade is the issuer-initiated proposal to convert the "plain vanilla" subordinated debt security ISIN:XS1003016018 (initial face amount of $400,000,000; coupon 7.850 per cent) into a Basel III-compliant Tier two capital instrument.
Moody's expects the terms and conditions of the subordinated notes issued under the programme to allow them to qualify as Tier 2 capital under Basel III.
The subordinated note bears interest at a rate of 10 percent per annum until April 20, 2016 (the maturity date of the subordinated note) and 20 percent per annum for all periods thereafter.
The subordinated bond has a maturity of 31 years and will have a first regular call date in year 11.
The statement however added that currently there is no outstanding and rated subordinated debt for this programme.
According to Basel III, in the future whenever banks issue capital instruments with the nature of bond, such as subordinated bonds, they must formulate "triggering conditions." Banks must convert the bonds into common shares or cancel the bonds, whenever one of the "triggering conditions" appears, including the equity ratio of common shares drops below 5.125%, loss exceeds one third of the capital, or the regulator takes over the management of the banks.
"Lower Tier 2 debt issued by these leasing companies are rated three notches below their respective National Long-term rating, given weak recovery prospects an investor could expect on investments in these subordinated debts in the event of default," Fitch said.
It is the first time the largest Japanese securities company has issued subordinated bonds since it placed 300 billion yen in such bonds in 2008 to stabilize its financial base that was shaken by the financial crisis and to finance its acquisition of some assets from collapsed Lehman Brothers Holdings Inc.