What are 'Subordinated bonds’?
The majority of bonds issued are "senior debt", meaning the holder has a priority claim on the company's assets, ahead of shareholders in the event of the company being liquidated. Some bonds are issued with "subordinated" status. This means the buyer of the bonds accepts a lower claim on the company's assets, below senior debt holders, but still above shareholders. Because of the additional risk, a higher yield will normally be offered.