What is Subordinated Debt?

What is Subordinated Debt?

As the name suggests, junior or subordinated debt holders contractually stand below all forms of senior debt. In this short video, Tim explains the risks associated with investing in subordinated debt and the reasons why borrowers issue this type of debt.
Overview

Subordinated debt, sometimes called junior debt, is a layer of debt that is contractually subordinated to all forms of senior debt.

Key learning objectives:

  • What is subordinated debt?

  • Why is subordinated debt riskier for investors?

  • Why do investors buy subordinated debt?

  • What is senior subordinated debt?

  • What are the benefits of issuing subordinated debt over equity?

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Summary
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