What is Senior Debt?
At its simplest, debt is split into senior and subordinated segments. Senior debt will receive priority in getting repaid from any cash left over in the business. In this video, Tim provides an overview of the order of repayment within senior debt.
Overview
Senior debt is when the debt of a corporate borrower is repaid first and thus has priority over unsecured debt if the company becomes insolvent. They will be repaid from any cash left over in the business and/or from the sale of assets.
Key learning objectives:
Define senior debt
Identify the different types of senior debt (secured and unsecured formats)
Explain why most debt is issued in senior unsecured debt
Summary
Expert
Tim Skeet
Banker with more than 35 years experience in the financial markets. Tim has been an ICMA board member and an ECBC steering committee member. Tim is a Freeman of the City of London.
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