Also known as mezzanine finance. In corporate finance, debt that ranks behind senior debt but in priority to equity and equity-like instruments such as convertible securities. Mezzanine debt may be secured or unsecured. It may also be convertible to equity in the borrower. This type of debt is generally subject to a bullet repayment and there may be prepayment fees imposed on the borrower.

Mezzanine loans are a more expensive financing source than secured debt or senior debt for a borrower because they carry more risk of repayment for the lender and are usually less able to be traded in the secondary market when compared to other funding or investment types.

Mezzanine debt is used for a variety purposes, such as:

A priority, subordination or intercreditor deed will usually be required to regulate the relationship between the senior and mezzanine lenders, particularly if the lenders share in a common security pool. For more information, see Practice note: overview, Intercreditor deeds and priority issues. For standard forms of these deeds, see Standard documents, Priority deed, Subordination deed and Intercreditor deed.