Banks issue subordinated debt because regulators count it toward loss-absorbing capital. Corporates issue it to raise money without diluting equity or breaching senior covenants. In both cases the investor is closer to equity than the label "bond" suggests.
The extreme version is bank additional tier one, which can be written down or converted to equity while the issuer is still a going concern. Credit Suisse's 2023 write-down showed that sub debt can be zeroed even when equity holders receive something.
Example: a bank's senior bonds trade at a 90 basis point spread and its subordinated bonds at 240. That 150 basis point gap is the price of standing one place further back in the seniority queue.
Related: seniority, capital-structure, recovery-rate, credit-rating, corporate-bond