What is Non-Standard Debt?

Non-standard debt, also known as non-standardized debt, refers to a category of debt instruments that differ from traditional standard debt.

Standard debt typically follows relatively standardized issuance and trading processes and is listed and traded on exchanges. In contrast, non-standard debt does not conform to traditional debt market rules and is primarily traded over-the-counter (OTC).

Characteristics of non-standard debt include:

1. Flexible Issuance Methods

Non-standard debt offers relatively free issuance methods, unrestricted by traditional issuance rules. Issuers can independently determine issuance terms and methods based on their financing needs and the specific requirements of investors.

2. Higher Risk

Compared to standard debt, non-standard debt carries higher risks. Since non-standard debt is not listed on exchanges, buyers and sellers find it more difficult to obtain liquidity and market pricing references, increasing transaction uncertainty.

3. Higher Investment Threshold

Due to the relatively limited trading methods and circulation scope of non-standard debt, participation is generally restricted to large financial institutions or professional investors. Smaller investors may not have access to such investment opportunities.

4. Flexible Pricing

Non-standard debt pricing is relatively less transparent, often requiring buyers and sellers to negotiate transaction prices. There may also be differing perceptions of the debt's value between parties.

Non-standard debt comes in various types, such as credit bonds, medium-term notes, and asset-backed securities. However, due to its higher risks, investors must conduct thorough risk assessments and due diligence and possess a higher investment threshold and professional knowledge to participate in related investment activities.

Friendly Reminder: When purchasing bank wealth management products, carefully check the proportion of non-standard debt. An excessively high proportion may indicate higher risks.