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What is the difference between mezzanine debt and subordinated debt?

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Answer:

Mezzanine debt is an industry term, and like many it gets used for different things. It normally applies to some type of interim or short term financing that is expected to be used for a short while, generally while other financing is arranged. It is also commonly high interest rate. It may or may not be subordinate to other debts.

Subordinate debt is fairly well defined legally: It means it is a debt whose rights to collection or seizure of assets are below those of another one. There can be many levels of subordinate debt. For example a 2nd mortgage is a subordinate debt to the first mortgage. If the property was foreclosed, the First get money before the Second.

First answer by IamLostRU. Last edit by IamLostRU. Contributor trust: 1567 [recommend contributor ]. Question popularity: 3 [recommend question].

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