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Secured senior debt is backed by an asset that was pledged as collateral. For example, lenders may place liens against equipment, vehicles or homes when issuing loans.
Is senior debt unsecured?
Senior debt is usually unsecured and backed by the general assets of the company.
Are senior notes secured or unsecured?
Senior notes are typically unsecured debt; they aren’t secured by collateral. Because senior notes have less risk than junior bonds, they typically pay lower interest rates, but that doesn’t mean they’re risk-free.
What is the difference between senior and junior debt?
Junior debt refers to bonds or other debts that have been issued with lower priority than senior debt. Unlike senior debt, junior debt is not typically backed by any type of collateral. As a result of these attributes, junior debt tends to be riskier and carry higher interest rates than senior debt.
What is included in senior funded debt?
Total Senior Funded Debt means total outstanding debt owed to the Bank by the Borrower plus all unsubordinated seller debt owed by the Borrower, all other indebtedness for borrowed money, capitalized leases, and any indebtedness secured by a lien on property owned by the Borrower.
What is senior debt on a balance sheet?
Senior Debt, or a Senior Note, is money owed by a company that has first claims on the company’s cash flows. It is more secure than any other debt, such as subordinated debt (also known as junior debt), because senior debt is usually collateralized by assets.
What is super senior debt?
Super-senior debt. Senior lenders are those who are in the best position if a company gets into difficulties with its debt as the senior lenders have first call on the unsecured assets (before other lenders).
Why would a company issue senior notes?
Why Do Companies Offer Convertible Senior Notes? Convertible notes and convertible senior notes are a popular way for companies to borrow money with lower interest obligations than other kinds of debt. When note-holders redeem their notes for company shares, they reduce the company’s debt obligations.
Is revolving credit facility senior debt?
Revolving credit facility (revolver), which can be paid down and reborrowed as needed. – Term debt (senior and subordinated) with floating rates. Payments-in-kind (PIK) toggle allows no interest payment and increase in principal.
Are senior secured notes first lien?
Senior debt is often secured by collateral on which the lender has put in place a first lien. Usually this covers all the assets of a corporation and is often used for revolving credit lines. It is the debt that has priority for repayment in a liquidation.
Is revolver a subordinated debt?
A revolver is a form of senior bank debt that acts like a credit card for companies and is generally used to help fund a company’s working capital needs. The interest rate charged on the revolver balance is usually LIBOR plus a premium that depends on the credit characteristics of the borrowing company.
What is the difference between senior debt and subordinated debt?
Senior debt has the highest priority and, therefore, the lowest risk. Thus, this type of debt typically carries or offers lower interest rates. Meanwhile, subordinated debt carries higher interest rates given its lower priority during payback. Subordinated debt is any debt that falls under, or behind, senior debt.
What is the difference between senior and mezzanine debt?
Mezzanine debt is a hybrid form of capital that is part loan and part investment. Senior debt is a loan from a bank. Banks lend off of asset values so most senior loans are collateralized with assets. The bank loan is always secured and in the first position.
What are funded assets?
Funded Assets means any trust, insurance policy, or other assets set aside to fund a Foreign Benefit Plan.
Where is funded debt on the balance sheet?
A company lists its long-term debt on its balance sheet under liabilities, usually under a subheading for long-term liabilities.
Are letters of credit considered funded debt?
Funded Debt and Letter of Credit Exposure means all outstanding indebtedness for borrowed money and other interest-bearing indebtedness, including current and long term indebtedness, plus all outstanding Letters of Credit, plus the product of eight (8) times all lease and rental expense calculated on a rolling four (4).
Is sub debt a debt or equity?
Subordinated debt is any debt that falls under, or behind, senior debt. However, subordinated debt does have priority over preferred and common equity. Examples of subordinated debt include mezzanine debt, which is debt that also includes an investment.
What is senior debt in real estate?
Senior debt is borrowed money with precedence over any other debts owed by an issuer. It takes priority for repayment if the company goes out of business or needs to sell the property. If the issuer becomes insolvent, it has to pay back this debt before other creditors receive any payment.
What is a senior unsecured loan?
Senior Unsecured Loan . Any Assignment of or Participation in or other interest in a loan that is not subordinated in right of payment and is not a Senior Secured Loan. Senior Unsecured Loan means a Loan (which is not a Senior Secured Loan) that is senior to any unsecured, subordinated obligation of an Obligor.
Are RCFs secured?
RCFs are typically senior secured but will generally be more senior in some respects than senior secured debt – it is often one class of debt that is considered “super senior” for reasons we will touch on later.
What is a senior secured debt facility?
Senior debt is secured by a business for a set interest rate and time period. The company provides regular principal and interest payments to lenders based on a preset schedule. This makes the debt less risky, but also commands a lower return for lenders. Senior debt is generally funded by banks.
Are convertible senior notes long term debt?
A convertible note is a type of short-term debt that the holder can convert into equity in the issuing company. With the convertible note, the investor loans money to the startup in exchange for shares in the company as opposed to a future payout of the principal in addition to interest.
Are convertible senior notes good or bad?
Convertible notes are good for quickly closing a Seed round. They’re great for getting buy in from your first investors, especially when you have a tough time pricing your company. If you need the cash to get you to a Series A that will attract a solid lead investor at a fair price, a convertible note can help.
Is convertible a debt equity?
Is a convertible note debt or equity? Convertible notes are originally structured as debt investments, but have a provision that allows the principal plus accrued interest to convert into an equity investment at a later date. This means they are essentially a hybrid of debt and equity.
