Encyclopedia of Investment Terminology

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Junior Debt

Debt that ranks behind other debts in other of priority to pay in case a company falls into receivership or be closed. Junior debt is also known as subordinated debt, subordinated loan, or subordinated debenture.

Should the company be liquidated during bankruptcy procedures, the liquidator, tax authorities and senior debt holders have priority over holders of Junior Debt. Junior debt is riskier for the lender than other types of debts, but usually carries a higher rate of return.

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