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Junior Debt

This is a debt or bond that can claim on a company's assets only after Senior Debt – bank loans etc. - holders have been satisfied. Otherwise known as Subordinate Debt.

Because Junior Debt is riskier it is rewarded with a higher rate of return. In the good times there is a broad appetite for this debt. When things turn sour, though, it doesn't look like such a good bet: see CDO – Collateralised Debt Obligation

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