Glossary of Terms

Senior Debt 2018-11-23 08:00:00

Senior Debt

Debt that takes priority over other unsecured, “junior” debt. Senior debt sits at the bottom of the capital stack, and offers the lowest risk with the lowest return.

Senior debt provides the least amount of risk due to the fact that it must be repaid before any other creditor. In the event that an issuer goes bankrupt, senior debt holders can be assured that they receive the first repayment. When a lien exists, senior debt is often secured by collateral as well.