Capital Note


DEFINITION of 'Capital Note'

Short-term unsecured debt generally issued by a company to pay short-term liabilities. Capital notes carry more risk than other types of secured corporate debt, because capital note holders have the lowest priority. The capital note often has a higher interest rate because it is unsecured.

BREAKING DOWN 'Capital Note'

The interest rate offered on a capital note is heavily dependent on the credit rating of the business, because it is all the investor has to rely on. Banks may issue capital notes in order to cover short-term financing issues, such as being able to meet minimum capital requirements. Capital notes are typically not callable.

  1. Capital

    1) Financial assets or the financial value of assets, such as ...
  2. Debt

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  3. Current Liabilities

    A company's debts or obligations that are due within one year. ...
  4. Short-Term Debt

    An account shown in the current liabilities portion of a company's ...
  5. Debenture

    A type of debt instrument that is not secured by physical assets ...
  6. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic ...
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