Junior debt refers to bonds or other forms of debt issued with a lower priority for repayment than other, more senior debt claims in the case of default. Because of this, junior debt tends to be riskier for investors, and thus carries higher interest rates than more senior debt from the same issuer.

Junior debt is synonymous with subordinated debt, and it may refer more generally to any second tier of debt paid immediately following the repayment of senior debt. Junior debt has a somewhat smaller probability of being paid back in default since all higher-ranking debt will be given priority.