Subordinated Loan
From Open Risk Manual
Definition
A Subordinated Loan is type of loan that is junior to other debts should a company be wound up.
Typical providers of subordinated loans are major shareholders or a parent company. A third-party providing funds through a subordinated loan would seek higher compensation (eg higher interest) relative to a Senior Loan due to the loan's subordinated status. (A loan's status, whether subordinated, secured or unsecured, is spelled out in the contract between borrower and lender.)[1]
References
- ↑ BCBS, Report on intra-group support measures, February 2012
