The Book of Banking Jargon

Structural Subordination

Structural Subordination: non-contractual Subordination created where a Slug of debt is issued by a Holding Company or other parent entity, with no Guarantee from the Operating Subsidiary that is the Issuer/Borrower under other indebtedness, thereby becoming effectively subordinated to the debt held closer to the operating assets (since all the Operating Subsidiary’s debt gets paid in full in an Insolvency before anything is dividended up to the Holding Company). See Subordinatio

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