Junior Debt

What is junior debt?

Junior Debt is a class of debt which is lowly ranked as far as its repayment by the issuer is concerned. It is more risky as compared to the senior debts. What this implies is that junior bonds are also referred to as subordinated bonds hence given the last priority in terms of being honored by the issuing firm.

Where does Junior Debt apply?

Junior Debt applies in circumstances where there is event of a bankruptcy and liquidation for in this case, the senior debts are paid first.

Junior Debt are necessary for they help a company in long term growth opportunities and diversification which will translate in to increased returns.