Which type of debt is typically unsecured high yield bonds but labeled as "Senior"?

Senior subordinated debt refers to debt instruments that, while labeled 'senior' in terms of their position in the capital structure, still ranks behind secured debt and other higher-ranking obligations in the event of liquidation. This type of debt is typically unsecured, meaning it does not have specific collateral backing it, making it riskier than secured debt but less risky than junior subordinated debt.

In the context of high-yield bonds, senior subordinated bonds attract investors because they offer higher interest rates to compensate for the higher risk associated with their unsecured nature. These bonds stand senior to junior subordinated debt, meaning in a liquidation scenario, they will be paid before any junior debt holders receive any repayment. However, they are subordinate to any secured bonds, which means that during liquidation, secured debt holders would have first claim over the company's assets.

This characteristic of senior subordinated debt makes it an attractive option for issuing companies looking to raise capital in leveraged finance scenarios, as it allows them to tap into the high-yield market while still presenting lower credit risk compared to junior debt, thereby appealing to a broader range of investors.