medium · Corporate Credit Analysis cap-structure
In a corporate group, why is debt issued at the Operating Company (OpCo) level considered senior to debt issued at the Holding Company (HoldCo) level?
- HoldCo debt is always contractually subordinated to OpCo debt.
- HoldCo debt is instead secured by the parent's trademark and patent portfolio.
- OpCo debt has a direct claim on the assets and cash flows of the business.
- OpCo debt is simply priced with a higher stated interest rate.
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