HoldCo / OpCo
Corporate Credit Analysis glossary · Capital Structure & Debt Mechanics
Definition
A corporate structure with a holding company at the top and operating companies underneath; debt at each level has different credit characteristics, with HoldCo debt structurally subordinated to OpCo creditors at the operating-entity level.
HoldCo / OpCo in plain English
Big companies are often built like a stack: a "HoldCo" (holding company) sits on top and simply owns the "OpCos" (operating companies) underneath that actually run the business and own the trucks, factories, and cash. This matters when you're lending money, because if things go bad, whoever is closest to the real assets gets paid first — and the OpCo lenders are closer than the HoldCo lenders. So HoldCo debt is "structurally subordinated," meaning it stands at the back of the line and only gets whatever trickles up after the OpCo's own lenders are paid. Think of a parent who owns a lemonade stand: people the stand itself owes get paid from the cash box first, and the parent (and anyone the parent owes) only sees what's left.
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