Senior debt

Senior debt takes priority over junior (also called subordinated) debt. Junior debt is only repaid with the funds left over after repaying senior debt.

Senior debt is not necessarily first in line to be paid:

  • The law gives priority to tax and certain payments to employees.
  • Secured debt has the first claim on assets used to secure it.

Senoir debt is lower risk, and should therefore be lower yield, than junior debt.

Copyright Graeme Pietersz © 2005-2020