medium · Debt Capital Markets bond-instruments-structures
An issuer has two bonds outstanding: one at the Operating Company (OpCo) and one at the Holding Company (HoldCo).
If both are unsecured, why does the HoldCo bond typically trade at a wider spread?
- The HoldCo bond simply carries a higher stated coupon.
- HoldCo bonds generally include a greater number of covenants.
- The HoldCo bond is typically issued with a materially shorter final maturity.
- The HoldCo bond is 'structurally subordinated' to the OpCo debt.
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