Subordinated Debt

Mean
 A loan (or security) that ranks below other
loans
 In the event of liquidation - prioritized lower
 In the event of bankruptcy, subordinated debt
holders receive payment only after senior
debt claims are paid in full
Levels of subordinated debt

 Senior subordinated debt - higher claim to

repayment

 Junior subordinated debt - lower claim to

repayment
Characteristics

 Unsecured loans which has no collateral

 Carries higher risk but also pays higher

returns

 Secondary or lesser claim

Thank You…