Senior Debt
Senior debt refers to loans or bonds that have the highest priority for repayment in the event of a default. It is typically secured by the company’s assets and carries lower interest rates compared to subordinated or unsecured debt. Senior debt holders are paid first, making it less risky for lenders. It is a critical part of a company’s capital structure, especially in leveraged buyouts, where senior debt is often used to finance acquisitions.
Key Takeaways
- Highest priority debt in the event of default.
- Typically secured by assets and offers lower interest rates.
- Less risky for lenders compared to subordinated debt.
- Often used in financing acquisitions and buyouts.
