Covenant Review’s report “EU Liability Management: Subordination and Seniority in European High Yield Bonds and Loans” provides an in-depth examination of the ranking and subordination risks prevalent in European high yield bonds and leveraged loans. It highlights the importance of understanding various forms of subordination—payment, lien, and structural—and the significance of intercreditor agreements in managing these risks.

• Payment subordination refers to a debt holder’s repayment hierarchy.
• Lien subordination concerns the relative priority of secured debt claims on collateral.
• Structural subordination happens when non-guarantor subsidiaries incur debt.

You can view the report here.