Senior Notes

What are 'Senior Notes'

Senior notes are debt securities, or bonds, that takes precedence over other unsecured notes and must be repaid in the event of bankruptcy. Senior notes are relatively secure because of their priority status in the event of liquidation. With this added security comes a reduced interest or coupon rate as compared to junior bonds.

BREAKING DOWN 'Senior Notes'

Unlike senior debt, senior notes are not necessarily secure or backed by assets. That means that the bondholder may not receive his or her full principal and interest in the event of liquidation, if there are insufficient assets to provide for that. Senior notes can also be issued as convertible notes so that the bondholder can convert them to shares of stock.



RELATED TERMS
  1. Senior Security

    A security that ranks above another security in the event of ...
  2. Junior Issue

    A corporate security that ranks lower in claim to another corporate ...
  3. Senior Debt

    Borrowed money that a company must repay first if it goes out ...
  4. Senior Convertible Note

    A debt security that contains an option where the note will be ...
  5. Senior Bank Loan

    A debt financing obligation issued by a bank or similar financial ...
  6. Senior Issue

    An issue of bonds, preferred stock or other securities that represents ...
Related Articles
  1. Bonds & Fixed Income

    Understand the Security Types of Corporate Bonds

    Any investor should be aware of the different security types regarding corporate bonds as well as the direct correlation to potential recovery rates.
  2. Investing Basics

    Not All Debt Holders Are Equal

    Senior debt is borrowed money a company repays first if the company goes out of business.
  3. Professionals

    Corporate Bonds

    FINRA Series 6 Exam Study Guide - Corporate Bonds. This section discusses corporate bonds in greater detail. Different types of corporate debt: secured, unsecured, junk and convertible bonds ...
  4. Professionals

    Bondholder's Rights

    CFA Level 1 - Bondholder's Rights. Learn the rights of bondholders in the bankruptcy process. Also shows how to determine the credit rating of a single issue or corporation.
  5. Professionals

    A Close Look At Certified Senior Designations

    We examine the validity of senior financial designations and whether they are worth pursuing.
  6. Retirement

    Benefit From Senior Discounts

    Older people can save a surprising amount using senior discounts. With Social Security payments flat for next year, this is the time to start using them.
  7. Retirement

    Beware: How to Spot Popular Scams for Retirees

    Some scams are tailor-made for seniors, but knowing the tricks of the fraudulent trade provides the best defense against scams.
  8. Professionals

    Corporate Bonds

    FINRA/NASAA Series 65: Section 8 Corporate Bonds. In this section four types of corporate bonds: secured, unsecured, convertible and zero-coupon bonds.
  9. Professionals

    Corporate Bond

    Corporate Bond
  10. Investing Basics

    Do Senior Loans Belong in Your Porfolio? (BKLN, BXFZX)

    Fixed income is supposed to be a stable part of an investment portfolio. How do senior loans fit in and at what risk?
RELATED FAQS
  1. What is the difference between subordinated debt and senior debt?

    Understand the difference between subordinated debt and senior debt. Learn what a company is required to do in case of bankruptcy. Read Answer >>
  2. What is a convertible bond?

    A convertible bond is a bond issued by a corporation that, unlike a regular bond, gives the bondholder the option to trade ... Read Answer >>
  3. How do I use a premium put convertible?

    Holders of convertible bonds face all the pitfalls that traditional bondholders face - liquidity risk, interest rate risk ... Read Answer >>
  4. What are the characteristics of a marketable security?

    Find out what it takes for a financial asset to be considered a marketable security, including its liquidity, intent of use ... Read Answer >>
  5. What forms of debt security are available for the average investor?

    Discover the various different types of debt securities, issued by government entities or corporations, that are available ... Read Answer >>
  6. What is the difference between convertible and reverse convertible bonds?

    The difference between a regular convertible bond and a reverse convertible bond is the options attached to the bond. While ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center