Senior notes are bonds that must be repaid before most other debts in the event that the issuer declares bankruptcy. That makes senior notes more secure than other bonds. That greater level of safety means investors earn slightly lower interest rates.
Also, why would a company offer senior secured notes?
Refinancings using senior debt capital can help decrease the financial burden on a company’s debt capital structure, redirecting cash flows to other business needs, or terming out short-term bank maturities with longer-term obligations that may be a better match for the asset life or duration of forecasted cash flow.
Also question is, is first lien the same as senior secured?
First lien debt holders are paid back before all other debt holders, including other senior debt holders. … This makes subordinated debt more risky than senior secured debt, therefore it typically pays a higher yield.
What is Senior Secured Bond?
Senior Secured Bond means a debt security (that is not a loan) that is (a) issued by a corporation, limited liability company, partnership or trust and (b) secured by a valid first priority perfected security interest on specified collateral.
Are bonds senior debt?
Secured Corporate Bonds
At the top in this structure would be the senior “secured” debt for which the structure is named. This is in contrast to structures where the age of the debt places determines which has seniority. If a bond is classified as a secured bond, the issuer is backing it with collateral.
What are senior secured first lien notes?
First Lien Senior Secured Loan means a Bank Loan (i) that is not (and cannot by its terms become) subordinate in right of payment to any other obligation of the obligor of such loan, (ii) that is secured by a valid first priority perfected security interest or lien to or on specified collateral securing the obligor’s …
What is senior bank debt?
A senior bank loan is a debt financing obligation issued to a company by a bank or similar financial institution and then repackaged and sold to investors. The repackaged debt obligation consists of multiple loans. Senior bank loans hold legal claim to the borrower’s assets above all other debt obligations.
What is senior leverage?
Financial Contract Definitions
“Senior Leverage Ratio” shall mean the ratio of Senior Debt of the Parent and its Subsidiaries on a consolidated basis to EBITDA for the twelve (12) month period most recently ended.
Are second lien loans senior secured?
The vast majority of all second lien loans are senior secured obligations of the borrower. Second lien loans differ from both unsecured debt and subordinated debt.
What is senior preferred debt?
Preferred debt is a financial obligation that is considered more important than–or make take priority over–other types of debt. For example, the first–or senior–mortgage would be considered preferred debt (when comparing the first and second mortgage). … Interest on preferred debt is typically free from any taxes.
Can second lien debt be secured?
Second–lien debt has a subordinated claim to the collateral pledged to secure a loan. … If a borrower defaults on a secured loan, the senior lien holder may receive 100% of the loan balance from the sale of underlying assets. However, the second–lien holder may receive only a fraction of the outstanding loan amount.
Is a second mortgage secured or unsecured debt?
A mortgage is a secured debt; the home is collateral for the amount you owe. Second mortgages, home equity loans or home equity lines of credit (HELOC) are also secured by your home.