Seniority level

The seniority level is the ranking of a corporate bond in terms of priority of repayment in the event of a company's liquidation or bankruptcy. Bonds can be classified into different seniority levels, such as senior secured, senior unsecured, subordinated, or junior, based on the order in which bondholders would be repaid from the company's assets. Senior secured bonds have the highest priority and are typically backed by specific collateral, while junior bonds have lower priority and are repaid after senior bonds in the event of liquidation.

Bonds with higher seniority levels, such as senior secured bonds, are considered less risky because they have a higher likelihood of repayment in the event of default. On the other hand, bonds with lower seniority levels may offer higher yields to compensate for the increased risk of lower priority repayment. Understanding the seniority level of a bond helps investors evaluate the credit risk and make informed decisions based on their risk tolerance and investment objectives.

Junior

Junior bonds are the most subordinate in the capital structure and have the lowest priority for repayment in case of bankruptcy or liquidation. They carry higher risk but may offer higher potential returns to compensate for the increased risk.

Junior preferred

Junior preferred bonds are a type of preferred stock that ranks below senior preferred stock in terms of priority for dividend payments and liquidation proceeds.

Junior subordinate

Junior subordinate bonds are debt securities that rank below senior debt and other obligations in the event of default. They are considered riskier investments due to their lower priority for repayment.

Mezzanine

Mezzanine debt falls between senior debt and equity in the capital structure. It is a form of financing that combines debt and equity characteristics and typically carries higher interest rates to compensate for the increased risk.

Senior

Senior bonds have the highest priority for repayment in case of default or liquidation. They are considered safer investments compared to junior bonds and typically offer lower interest rates.

Senior contingent

Senior contingent bonds are debt securities that rank senior to other obligations but have certain conditions that must be met for repayment.

Senior non-preferred

Senior non-preferred bonds are senior to subordinated debt but rank below traditional senior debt in the capital structure.

Senior preferred

Senior preferred bonds have a higher priority for repayment compared to common stock but rank below senior debt in the event of default.

Senior subordinate

Senior subordinate bonds are debt securities that rank below traditional senior debt but above junior debt in the capital structure.

Subordinate

Subordinate bonds are debt securities that rank below senior debt and have a lower priority for repayment in case of default. They are considered riskier investments due to their lower priority status.

Not disclosed

The seniority level is not disclosed or specified in the bond documentation.

Not relevant

The concept of seniority level is not relevant to the specific bond in question.

Other

The bond falls into a category not covered by the listed seniority levels.