Definition of Subordinated Bond
What is a Subordinated Bond
A subordinated bond is an unsecured debt obligation that has a lower priority claim to the assets as compared to secured creditors or senior debt obligations.
In the event of a bankruptcy or company liquidation, subordinated debt can only be paid after the claims of secured creditors and senior debt obligations have been satisfied. A subordinated bond is also known as junior debt.
Glossary of Terms and Phrases
A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.
We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.