A bond that issues where the interest is higher than the company's other bonds, but the issue has a lower priority if the company goes out of business is called a subordinated debenture.
The interest paid to this debt is guaranteed, but if the company liquidates, these debts are the lowest creditor priority. Investors would have to wait for other obligations, including secured and debenture holders to be paid.
The interest paid to this debt is guaranteed, but if the company liquidates, these debts are the lowest creditor priority. Investors would have to wait for other obligations, including secured and debenture holders to be paid.
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