A bond that is both senior (senior bond) and unsecured. A senior bond takes priority over other classes of debt securities such as unsecured or “junior” debt security issued by the same issuer. Senior bond has an advanced seniority in the issuer’s capital structure than subordinated bond, and also it has priority for payment in case of liquidation. In the event the issuer goes bankrupt and therefore is unable to pay off its obligations, i.e., the bond’s principal amount and interest, senior bond has a prioritized right to be repaid before other types of debt securities receive any payment.
Unsecured senior bond is not guaranteed by collateral from which the bondholder can redeem the principal amount along with interest payment. Rather it is backed and issued based on the borrower’s (issuer’s) creditworthiness.
