Corporate bonds that are backed by the full faith and credit of the company, but have a lower priority than debentures are subordinated debentures.
These debt securities will pay a higher rate, but are lower in the creditor ladder should the company need to liquidate.
The bonds pay a stated rate of interest and a yield to maturity. Some may be callable and many are rated below investment grade - but not all. A rating below investment grade is known as a junk bond.
Subordinated debt could be issued by large or small corporations. If the company pays on the bonds timely, investors can realize a very attractive and above market rate of return.
http://www.aitraining.com/subordinated.htm
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