Respuesta :
Washington Enterprises issued bonds in 2000. Five years later, in 2005, the company issued additional debt which had a lower priority than the debentures issued in 2000. The 2000 debentures are seniority, and the 2005 debentures are subordinated debentures.
Explanation:
Seniority corresponds to the sequence of reimbursement in case of an issuer's sale or bankruptcy. It can contribute to debt or preferred stock. Senior debt should be repaid unless debt is repaid which is subordinated or junior. Bond seniority implies the that senior bond will acquire a preference over other bonds and creditors if there is a collapse. Act as a benefit for bondholders, as it mitigates their risk. Hence the bond's coupon rate will be lower. Subordinated debt or debenture is an unsecured loan or bond, these are often referred to as junior securities.
