But depositors and senior debtholders should be guaranteed, in order to protect other financial institutions that invest in those instruments, thus avoiding contagion effects. (alephblog.com)
Debt is cheaper than equity, given debtholders are paid first in the hierarchy of a hypothetical liquidation bankruptcy scenario. (daytrading.com)
This means debtholders hold less risk relative to stockholders within the same company and therefore demand less of a return on their capital. (daytrading.com)