What does "senior unsecured, direct, unconditional and unsubordinated debt” mean

hi, i came across the above mentioned debt issuance.

i'm not a bond expert - i understand senior debt, subordinated debt, unsecured debt
but what does the "direct, unconditional" portion mean?

appreciate if anyone familiar can throw some light.

(09-11-2012, 07:19 PM)AlphaQuant Wrote: hi, i came across the above mentioned debt issuance.

i'm not a bond expert - i understand senior debt, subordinated debt, unsecured debt
but what does the "direct, unconditional" portion mean?

appreciate if anyone familiar can throw some light.

I'm no expert either but will hazard a guess. Hope an expert steps in to enlighten...

Direct = Direct relationship between borrower/issuer and lender, no third party involved e.g. bank, in the issuance of the debt.
Unconditional = Without requirements/ conditions attached to the guaranteed repayment of principal by the borrower.

Yes, this is also my understanding

Direct = the issuer and the debtor are one in the same. In the case of an exchangeable bond, for example, the issuer can be a Holdco, but security and (in event of conversion) equity issuer and collateral can be at another company.

Unconditional = per above, though I would look hard at the loan docs before taking too much comfort from "unconditional" very likely to be conditions?

I would finally add:
senior unsecured, direct, unconditional and unsubordinated debt = depending on the cap structure, this is almost as risky as equity!

thks mates - very useful replies.

very good point raised: look at the overall capital structure of the firm to see what an issue actually mean!

(13-11-2012, 01:52 PM)AlphaQuant Wrote: very good point raised: look at the overall capital structure of the firm to see what an issue actually mean!

Hi AlphaQuant, I do not really understand what you mean. Can you share how looking at overall capital structure will allow to gain more understanding of certain issue?

i hadn't been involved in equities for quite a few years and only started looking into some stuff in recent months. quite intrigued to find the number of exotic looking issuances that firms are issuing to fund their capital - step up callables etc.

looking at the capital structure allows one to see where in the pecking order one lie, and also how much credit worthiness there is (why will u need to issue an exotic debt/equity i/o of a vanilla?)