Senior Debt
The highest-ranking debt in a capital structure, with priority claim on assets and cash flows, typically provided by banks or institutional lenders.
Also known as: Senior secured debt, Senior loan
One-line definition
Senior debt is first in line — it gets repaid before mezzanine or equity holders in a restructuring or liquidation.
Typical features
- Secured against assets.
- Lower interest rate than mezz or equity.
- Covenants (leverage, interest cover) that constrain the borrower.
- Typical quantum: 3–5× EBITDA in a leveraged deal.
TS link
Lenders use the FDD (sometimes a dedicated debt advisory report) to size the loan and set covenants. TS EBITDA and cash flow analysis directly drives debt quantum.
Related terms
Mezzanine Debt
A hybrid financing instrument ranking between senior debt and equity, typically carrying a higher interest rate and often including equity warrants.
Unitranche
A single blended debt facility combining senior and subordinated debt into one instrument at one blended rate, popular in mid-market PE deals.
LBO (Leveraged Buyout)
An acquisition financed primarily with debt, where the target's cash flows service the leverage and equity returns are amplified.