Senior debt

Senior debt

In finance, senior debt, frequently issued the form of a senior note, is debt that takes priority over other debt securities sold by the issuer. Senior debt has greater seniority in the issuer's capital structure than subordinated debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment.

Senior debt is often secured by collateral on which the lender has put in place a first lien. Usually this covers all the assets of a corporation and is often used for revolving credit lines. It is the debt that has priority for repayment in a liquidation.

It is a class of corporate debt that has priority with respect to interest and principal over other classes of debt and over all classes of equity by the same issuer.

External links

* [http://www.investorwords.com/4486/senior_debt.html Senior debt]

References


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