Structural subordination and Sub-prime lending: Difference between pages

Revision as of 07:40, 22 June 2014

Making loans that are in the riskiest category of consumer loans.

Also known as near-prime, non-prime, or second-chance lending.

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-''Risk management''.
+Making loans that are in the riskiest category of consumer loans.
-An effective reduction in the ranking of the claim of a lender or other creditor resulting from a combination of:
-#The ownership structure of the borrower, for example in a group of companies; and
-#Holding a claim against the 'wrong' legal entity.
-For example, the claims of the creditors of a holding company may become structurally subordinated to the claims of creditors of the subsidiary companies in the same group.
-This is because the claim of the holding company itself - as a shareholder of the subsidiary - is generally subordinated to the claims of the other creditors of the subsidiary.
-This can be particularly problematic where the subsidiary is in a different country from the holding company, where local legal and other claims may effectively erode the position of the holding company's creditors.
+Also known as near-prime, non-prime, or second-chance lending.
 == See also ==
-* [[Subordination]]
+* [[Credit rating]]
+* [[Investment grade]]
-[[Category:Financial_risk_management]]
+* [[Junk]]