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Specific Motors, an upstart U.S. car company, has one outstanding bond issue worth $40 billion. It has no covenants. They decide to issue a new

Specific Motors, an upstart U.S. car company, has one outstanding bond issue worth $40 billion. It has no covenants. They decide to issue a new series of bonds, also worth $40 billion, but the new bonds are senior to their first issue. How does this make the first bondholders worse off?

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