Tatts Group Limited is the latest company to launch a retail bond issue, and, like Heritage Bank's issue (which launched two weeks ago), this is a rare senior unsecured bond issue. Moreover, it is only the third issue by an ASX-listed company that is not a financial institution since Tabcorp issued its bonds in May 2009. The Tatts bond issue is also only the second to use a short-form prospectus. Primary Health Care was the first, in September 2010.The bonds are senior unsecured debt; they are plain vanilla debt with none of the complications that come with the subordinated and hybrid debt issuance that has dominated the retail bond market this year.With senior unsecured debt, coupons are paid on time and in full. There is no provision for the deferral of coupons on either a cumulative, or more commonly, a non-cumulative basis.And there is no diminution of the cash received because of the provision of franking credits. Moreover, the non-payment of a coupon is a default - pure and simple. Similarly, the principal of the bond must be paid at maturity. Failure to do so is a default. The principal cannot be converted into ordinary shares, either at maturity or if a "mandatory conversion" occurs.If there is a default, a typical investor might expect that senior unsecured bond-holders would stand at the head of the queue to claim against the assets of the company. In fact, they don't.In a wind up, there are preferred creditors (set out in law) who rank ahead of everyone else, and then there are the secured creditors who get next go at the company's assets.  Then come the unsecured creditors, including unsecured bond-holders. But at least unsecured bond-holders rank ahead of subordinated and hybrid note-holders and shareholders.  That senior unsecured bond-holders rank behind secured debt holders is a form of subordination, sometimes referred to as contractual subordination. Another form of subordination that unsecured bond-holders need to be aware of is structural subordination. This occurs when a holding company issues the bonds (which is typically the case) but all the assets of the group are held by subsidiary companies. In a wind up of the corporate group, creditors of  subsidiaries have first claim against the assets of the subsidiaries. In this sense bond-holders effectively rank as shareholders of the subsidiaries and can only have a claim against what is left, if anything.How will bond-holders in Tatts rank in terms of contractual and structural subordination? The prospectus is helpfully explicit in this respect. First, there is no secured debt within the group. Second, there is a negative pledge. This prohibits the granting of security to lenders with some exceptions. The exceptions may or may not be a cause for concern.While the exceptions relate mainly to modest amounts of security granted in the normal course of business there is no limit on the amount of security that can be granted to banks in the future.The issue of structural subordination is addressed with the bond-holders being the beneficiaries of joint