A type of debt (financing) that creates a bridge (mezzanine) between a company’s senior debt and equity. One component (senior debt) is less risky than the other (equity), creating a hybrid form of capital that isn’t fully backed by the value of a company’s assets, but instead by the value of the company as a going concern (based on its cash flows). Hence, it forms a tier in a company’s capital structure between its debt and equity. Mezzanine debt is also created when a hybrid debt issue is subordinated to another debt issue from the same issuer.
It is also known as a subordinated debt or a mezzanine debt capital.
