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 ?
Delicious Alternative Desserts Ltd., (DAD) a licensed manufacturer, distributor and marketer of premium and super premium ice cream and frozen dessert products, announced that on November 17 it had arranged to place privately a 10% secured subordinated debenture with a sophisticated investor in Ontario.
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.
BANKING AND CREDIT NEWS-November 25, 2015-Manulife announces subordinated debenture issue
BANKING AND CREDIT NEWS-December 2, 2014-Manulife completes subordinated debenture offering
In December 2017, Sampath raised LKR7.6 billion and LKR6 billion via a rights issue and Basel III compliant subordinated debenture issuance, respectively.
Global Banking News-November 23, 2015--Manulife completes subordinated debenture offering
44965U 2 and U4505N 6) ( ECAPS II and, together with ECAPS I, the ECAPS ) to effect certain amendments (the Amendments ) to both its 5.90% Junior Subordinated Debenture due 2065 ( Debenture I ) and its 6.25% Junior Subordinated Debenture due 2065 ( Debenture II and, together with Debenture I, the Debentures ).
Global Banking News-November 19, 2015--Manulife announces subordinated debenture issue
The ECAPS I represent preferred undivided beneficial ownership interests in the assets of ILFC E-Capital Trust I, a trust which holds a $600 million Junior Subordinated Debenture due 2065 issued by ILFC ( Debenture I ), and the ECAPS II represent preferred undivided beneficial ownership interests in the assets of ILFC E-Capital Trust II, a trust which holds a $400 million Junior Subordinated Debenture due 2065 issued by ILFC ( Debenture II and, together with Debenture I, the Debentures ).
Colombo: Fitch Ratings has assigned Seylan Bank PLC's (A-(lka)/Stable) proposed Basel II-compliant subordinated debenture issue of up to LKR5bn a National Long-Term Rating of 'BBB+(lka)(EXP)'.
Hydro One Limited ("Hydro One"), the parent company of Ontario's largest electricity transmission and distribution utility, announced it has completed the redemption of all of its outstanding $1,540,000,000 aggregate principal amount 4.00% convertible unsecured subordinated debentures ("Debentures") represented by instalment receipts (the "Instalment Receipts").
BANKING AND CREDIT NEWS-January 10, 2019--Manulife to redeem fixed/floating subordinated debentures