Definition of Senior security:
With respect to a company’s capital structure, seniority refers to the order of repayment to security holders in the case of a default by the issuing corporation.
In the event of a company's bankruptcy or liquidation, a senior security is one that ranks highest in the order of repayment before other security holders receive a payout. Senior securities are typically considered the safest offering by a company because in the event of default the senior security holders will be paid any funds owed before investors in lower ranking securities.
Security that has priority in claims on the assets and income of the issuer than the claims of other (junior) securities issued by same entity. For example, mortgage bonds are senior to debentures which are senior to ordinary shares (common stock).
How to use Senior security in a sentence?
- A senior security is one that ranks higher in terms of payout ranking, ahead of more junior or subordinate debt.
- Junior debt, then preferred shareholders, and then common shareholders are paid out last.
- Secured and senior debt is paid first, in the event a company runs into financial trouble.
Meaning of Senior security & Senior security Definition