Senior debt refers to a class of debt that takes priority over other debt securities sold by the issuer. If the issuer goes bankrupt, the senior debt must be repaid before other classes of debt are repaid. Mortgage bonds, as well as most loans from financial institutions, are senior debt.
In mortgages, a first mortgage is a senior debt, and the second mortgage is a junior debt.
- senior debt definition. Mortgageloan.com.