What is Senior Debt?

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

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Summary
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