Subordinated Debt


DEFINITION of 'Subordinated Debt'

A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings.

Also known as a "junior security" or "subordinated loan."


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BREAKING DOWN 'Subordinated Debt'

In the case of default, creditors with subordinated debt wouldn't get paid out until after the senior debtholders were paid in full. Therefore, subordinated debt is more risky than unsubordinated debt.

  1. Subordinate Financing

    Debt financing that is ranked behind that held by secured lenders ...
  2. Subordination Agreement

    A legal agreement which establishes one debt as ranking behind ...
  3. Absolute Priority

    A rule that stipulates the order of payment - creditors before ...
  4. Senior Security

    A security that ranks above another security in the event of ...
  5. Junior Security

    A security that ranks lower than other securities in regards ...
  6. Unsubordinated Debt

    A loan or security that ranks above other loans or securities ...
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