Hi,
Could anyone please explain the difference between the senior and subordinate debt?
I have Debt Capital Markets (DCM) interview tomorrow so I would appreciate if you can tell me any other interview questions and answers that I should be prepared for.
Thank you!
One has priority over the other (i.e. "seniority"); guess which?
oh boy you've got some studying to do. I've never worked in DCM before, but some debt related questions:
This might be relevant to your interests:
http://www.macabacus.com/valuation/lbo/capital-structure
How do you go into a DCM interview not knowing what these are???
well, that is why I posted this for help. Thanks for your information and inputs guys!
Hey, maybe can you complete this post with questions you actually faced ?
How to understand Seniority and Security of Debt (Originally Posted: 07/07/2014)
Hi guys,
I've been reading some books and posts regarding to LBO these days and getting a bit confused on these two terms.
Here's my understanding. The seniority just means the pecking order of servicing a debt, such as paying up interest and principal. And the security just means whether the debt is made against some collaterals.
So, if this is case, will there be some financing structure that include senior unsecured debt and subordinated secured debt?
For instance: When a company goes bust, all the debt holders have the right to claim its assets. However, due to the different seniority and security, how to resolve the interest between senior unsecured debt holder and subordinated debt holder?
Another thing is, what's senior subordinated notes? How can one be both senior and subordinated? (Or does this suggest that it belongs to senior debt, but it is subordinated to all the other senior debts. So this term can never exist alone.)
Thanks a lot guys.
I'm not the biggest expert but due to some clauses in debt, I cannot see it possible to have senior unsecured and then a subordinate secured. I know there are clauses that specially say even when its unsecured that if another security is made secured and this security must be secured as well.
Pari Passu Describing securities or debts with equal claim on some right. A new issue of a security may be issued pari passu, which indicates that it carries the same rights as shares
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