Mezzanine Financing
Mezzanine capital In finance , mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares . Mezzanine financings can be structured either as debt (typically an unsecured and subordinated note) or preferred stock . Mezzanine capital is often a more expensive financing source for a company than secured debt or senior debt . The higher cost of capital associated with mezzanine financings is the result of its being an unsecured, subordinated (or junior) obligation in a company's capital structure (i.e., in the event of default , the mezzanine financing is only repaid after all senior obligations have been satisfied). Additionally, mezzanine financings, which are usually private placements , are often used by smaller companies and may involve greater overall levels of leverage than issues in the high-yield market ; they thus involve additional ris