Credit enhancement status

The credit enhancement status refers to the position of a bond in the hierarchy of debt obligations issued by a company or entity. The hierarchy of debt obligations determines the order in which bondholders will be repaid in case of default, impacting the overall risk and reward characteristics of the bond.

Junior subordinate

Junior subordinated debt is the lowest-ranking debt in the hierarchy and is typically considered the riskiest type of bond. In the event of bankruptcy or liquidation, junior subordinated bondholders are paid only after all senior and subordinated debt obligations have been satisfied. Junior subordinated bonds often offer higher interest rates to compensate for the increased risk associated with their lower priority status.

Senior

Senior debt is considered the highest-ranking debt in terms of priority for repayment in the event of bankruptcy or liquidation. Senior bondholders have the first claim on the company's assets and are paid before other classes of debt. Senior bonds typically have lower interest rates compared to subordinated or junior debt due to their higher priority status.

Senior subordinate

Senior subordinated debt falls between senior and subordinated debt in the hierarchy of debt obligations. These bonds are senior to traditional subordinated debt but rank below senior debt in terms of repayment priority. Senior subordinated bonds offer a balance of risk and return, with higher priority than subordinated debt but lower priority than senior debt.

Subordinate

Subordinated debt ranks below senior debt in the hierarchy of debt obligations. In the event of bankruptcy or liquidation, subordinated bondholders are paid only after senior bondholders have been fully satisfied. Subordinated bonds carry higher risk but offer higher potential returns through increased interest rates to compensate for the lower priority in repayment.

Unsubordinate

Unsubordinated debt is another term for senior debt, indicating that the bond is not subordinated to any other debt obligations. Unsubordinated bonds have the highest priority for repayment and are considered less risky compared to subordinated or junior debt.