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Subordinated credit default swap
A credit default swap in which the reference obligation is a subordinated debt instrument issued by the reference entity. This means that the relevant recovery rate following a default will be determined by the value of the entity's subordinated debt. As a result, a subordinated credit default swap will normally trade with a higher spread than a senior credit default swap on the same name. Subordinated credit default swaps are traded mainly on financial reference entities such as banks and insurance companies.
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