senior debt

Senior Debt

A bond or other form of debt that takes priority over other debt securities sold by the issuer.

Investopedia Commentary

In the event the issuer goes bankrupt, senior debt must be repaid before other creditors receive any payment.

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See also: Absolute Priority, Bankruptcy, Bond, Debt, Senior Security

senior debt

A class of 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. In the event of financial difficulties or liquidation of the borrower's assets, holders of senior debt will have a priority claim. Most loans from financial institutions and certain high-grade debt securities such as mortgage bonds are senior debt. Because senior debt has a relatively secure claim, it is less risky from the point of view of the lender and it pays a lower rate of interest compared with debt of the same issuer having a subordinate claim. Compare junior debt.