A subordinated debt usually referred to as a subordinated debenture, is an unsecured loan or bond that has lower priority in relation to claims on assets or earnings than other, more senior loans or securities. Consequently, junior securities also refer to subordinated debentures. Subordinated debt holders will not receive payment in the event of borrower default until all senior bondholders have been paid in full.
Riskier than unsubordinated debt is subordinated debt. Any sort of loan that, in the event of borrower default, gets repaid last among all other company obligations and loans is referred to as subordinated debt. Subordinated debt is typically borrowed by larger firms or other commercial entities. Senior debt is prioritized higher in bankruptcy or default situations when a debt is subordinated, which is the exact reverse of unsubordinated debt.