Question

Which of the following is NOT a form of subordinated debt? 1.Revolver 2.Payment-In-Kind Notes 3.Vendor Notes 4.High yield bonds

Answer 1

Out of the given options revolver is not a subordinated debt.

• Revolver is senior debt, and is more secure than any other debt, like the subordinated debt which is also known as junior debt.
• Revolver is secured as the higher debt is typically collateralized by cash, and payment is first done to high debt holders. The revolver is often used for short-term lending, and is paid out very quickly almost always.
• A company's revolver is a short-term credit line which the company can use when it needs short-term funding to pay for operating expenses or one-time transactions.