Seniority (financial)
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In finance, seniority refers to the order of repayment in the event of a sale or bankruptcy of the issuer. Seniority can refer to either debt or preferred stock. Senior debt must be repaid before subordinated (or junior) debt is repaid.[1] Each security, either debt or equity, that a company issues has a specific seniority or ranking. Bonds that have the same seniority in a company's capital structure are described as being pari passu. Preferred stock is senior to common stock in a sale when preferred shareholders must receive back their preference, typically their original investment amount, before the common shareholders receive anything.
FpML
[edit]The seniority of bonds recognised in FpML (Financial products Markup Language) are as follows:
| FpML value | Description |
|---|---|
| Senior | Top precedence |
| SubTier3 | Subordinate, Tier 3 |
| SubUpperTier2 | Subordinate, Upper Tier 2 |
| SubLowerTier2 | Subordinate, Lower Tier 2 |
| SubTier1 | Subordinate, Tier 1 |
See also
[edit]References
[edit]- ^ The American Heritage Dictionary of Businessurt Publishing Company, 2010
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