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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.
Does First lien mean secured?
A First Lien Home Equity Loan (First Lien) is a mortgage product, meaning it’s a loan secured with real estate as collateral. However, First Liens are generally taken out when you’ve already purchased a home with a traditional mortgage.
What is first lien senior secured?
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.
Is senior unsecured second lien?
Another term for this type of debt security is junior or subordinated debt. These debts have a lower priority of repayment than do other, senior, or higher-ranked debt. In other words, second-lien is second in line to be fully repaid in the case of the borrower’s insolvency.
Are senior notes secured debt?
A senior note is a type of corporate bond that carries a higher-priority claim in bankruptcy than a junior note, which means those who own senior notes get repaid first. Senior notes are typically unsecured debt; they aren’t secured by collateral.
What is the difference between senior secured and first lien?
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 a senior secured debt?
Senior secured loans are debt obligations generally issued by non-investment grade businesses. These loans are usually “secured” by a company’s assets, and are typically used to fund a company’s growth or cover general operating expenses.
Is junior debt secured?
It is usually secured debt with collateral; however, it can also be unsecured with specific provisions for repayment seniority. Subordinated debt follows senior debt and has its own repayment terms. Generally, junior debt and subordinated debt is unsecured debt that is not backed by collateral.
Are senior loans safe?
Because senior bank loans take precedence in the repayment structure they are relatively safe, though they are still considered non-investment grade assets, as most of the time the corporate loans in the bundle are made to non-investment grade companies.
Are senior loans risky?
Not Risk-Free In a nutshell, Senior loans are riskier than investment-grade corporate bonds but slightly less risky than high-yield bonds. It’s important to keep in mind that valuations in this market segment can change quickly.
What is senior secured second lien?
Second Lien Senior Secured Debt means Debt of the Credit Parties secured by Liens on the Collateral on a junior basis pursuant to intercreditor arrangements, which shall contain customary market terms and conditions for second lien financings and otherwise be in form and substance reasonably satisfactory to the.
What does 1st lien position mean?
A first lien is the first to be paid when a borrower defaults and the property or asset was used as collateral for the debt. A first lien is paid before all other liens. A bank that holds the first mortgage on a property has the first lien.
What are senior unsecured bonds?
Senior Unsecured Bond is a direct debt obligation of the issuer, which gives its holder a preferential right over the holders of subordinated bonds to the assets and income of the corporation in the event of its bankruptcy, while this type of bond is not backed by any assets.
What does senior secured notes mean?
Senior Secured Notes means secured or unsecured notes or other debt of the Company issued after the Closing Date, and the Indebtedness represented thereby; provided that (a) the terms of which do not provide for any scheduled repayment, mandatory redemption or sinking fund obligations prior to the Latest Maturity Date.
Is senior unsecured debt subordinated?
Senior Unsecured Debt means indebtedness for borrowed money that is not subordinated to any other indebtedness for borrowed money and is not secured or supported by a guarantee, letter of credit or other form of credit enhancement.
What does it mean when a company issues senior notes?
Senior Debt, or a Senior Note, is money owed by a company that has first claims on the company’s cash flows. It means the lender is granted a first lien claim on the company’s property, plant, or equipment. PP&E is impacted by Capex, in the event that the company fails to fulfill its repayment obligations.
Are Bonds 1st lien?
First Lien Bonds means the Prior Bonds, the Series 2015 Bonds, and any Additional First Lien Bonds that are secured by a lien that is a first lien on the Net Revenues of the System, senior in standing and priority of lien with respect to the Net Revenues to the claim of any Junior Lien Bonds.
What type of lien has the most seniority?
Liens generally follow the “first in time, first in right” rule, which says that whichever lien is recorded first in the land records has higher priority than later recorded liens. For example, a mortgage has priority over a judgment lien if the lender records it before the judgment creditor records its lien.
Can you have 2 leins on a vehicle?
There are two types of liens: voluntary and involuntary. If more than one lien is placed on a property, the debt originating first is the first lien, and any subsequent lien is second, third and so on.
What are senior securities?
A senior security is one that ranks higher in terms of payout ranking, ahead of more junior or subordinate debt. Secured and senior debt is paid first, in the event a company runs into financial trouble. Junior debt, then preferred shareholders, and finally common shareholders are paid out last.
What is a senior secured floating rate loan?
Senior Secured Loans (SSL), commonly referred to as bank loans or floating rate loans are short term debt obligations issued by banks and private corporations. Companies use this loans to finance an expansion, fund an acquisition or for general corporate purpose.
What does senior debt include?
Any debt with higher priority over other forms of debt is considered senior debt. For example, a company has debt A that totals $1 million and debt B that totals $500,000. Debt A is senior debt, and debt B is subordinated debt. If the company files for bankruptcy, it must liquidate all of its assets to repay the debt.
