What is a subordinated convertible bond?

A subordinated convertible bond is a type of bond that is only repaid in the event of bankruptcy after all other creditors have been repaid. Because of this increased risk, the issuing institution must typically offer a higher interest rate than on ordinary convertible bonds.

This instrument combines the characteristics of subordinated debt with the option to convert the bond into shares of the issuing company.

The term is relevant in the context of capital structure and investment strategies.