Seniority of different debt in the capital structure
If you were asked this question in an interview how would you answer it: What is more senior in the capital structure, mezzanine or convertible debt?
Thanks for any responses can't seem to find a good answer on it.
Mezz is by definition the lowest ranking debt, and senior only to equity. It would be senior to convertible pref, but that is typically not considered convertible debt. This might not be true in other markets, but has held in the US from what I've seen.
Is mezz not senior over subordinated debt? This is what i remember reading on the WSO guide so want to confirm
Subordinated debt is more senior than mezz, and junior to unsecured debt.
Mezz and convertible debt is essentially the same thing. It's kind of a trick question because mezz is a broad term to describe a class of securities that act similar to debt and equity. They're highly negotiated so it's not a conventional market or vanilla in the sense that it isn't like bank loans where the debt has 'regular' structural and pricing terms.
Maybe ask questions to find out more about the two debt pieces
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