Junior Debt

Junior debt is debt that ranks behind specified senior obligations in priority of payment or recovery under the governing agreements.

A simple example

A subordinated note may receive payment only after senior secured lenders are paid according to the agreed priority.

Why this matters to income investors

Lower priority can mean greater loss severity if the borrower restructures or liquidates.

How to use junior debt in your research

Read the capital structure, collateral, guarantees, subordination terms, covenants, and recovery assumptions.

This material is general education and information, not individualized investment, tax, or legal advice.