Senior Debt
Senior Debt is a type of company loan that gets paid back first if a business runs into financial trouble. Think of it like having first priority in line at a restaurant - these lenders get served first. Companies use Senior Debt as a way to borrow money for various business needs, like buying other companies or expanding operations. It's considered safer than other types of loans (like junior or mezzanine debt) because of this first-in-line position, which usually means it has lower interest rates. When you see this term in resumes, it often means the person has experience managing, analyzing, or working with these types of loans in investment or banking roles.
Examples in Resumes
Managed $500M Senior Debt portfolio for private equity acquisitions
Structured Senior Debt financing packages for middle-market companies
Led due diligence for Senior Debt investments across healthcare sector
Typical job title: "Senior Debt Analysts"
Also try searching for:
Where to Find Senior Debt Analysts
Professional Networks
Industry Organizations
Example Interview Questions
Senior Level Questions
Q: How do you evaluate a company's ability to take on senior debt?
Expected Answer: A strong answer should discuss looking at company's cash flow, existing debt obligations, market position, and industry conditions. Should mention key metrics like debt service coverage ratio and leverage ratios in simple terms.
Q: What factors do you consider when structuring a senior debt package?
Expected Answer: Should explain how they consider company size, industry, growth plans, existing debt, and market conditions. Should discuss how they determine appropriate interest rates, repayment terms, and protective covenants.
Mid Level Questions
Q: What are the key differences between senior debt and other types of financing?
Expected Answer: Should explain how senior debt differs from junior debt, equity, and mezzanine financing in terms of risk, return, and payment priority in simple terms.
Q: How do you monitor a senior debt investment?
Expected Answer: Should discuss reviewing financial statements, tracking covenant compliance, maintaining relationship with management, and watching for early warning signs of trouble.
Junior Level Questions
Q: What is senior debt and why is it important in private equity?
Expected Answer: Should be able to explain that senior debt is a loan that gets paid back first, and how private equity firms use it to help fund company purchases and operations.
Q: What basic financial metrics do you look at when analyzing senior debt?
Expected Answer: Should mention basic concepts like debt-to-EBITDA ratio, interest coverage ratio, and cash flow analysis in simple terms.
Experience Level Indicators
Junior (0-2 years)
- Basic financial analysis
- Credit documentation review
- Financial modeling basics
- Understanding of debt structures
Mid (2-5 years)
- Deal structuring
- Due diligence management
- Credit analysis
- Relationship management
Senior (5+ years)
- Complex deal structuring
- Risk assessment
- Portfolio management
- Team leadership
Red Flags to Watch For
- No understanding of basic financial statements
- Lack of credit analysis experience
- Poor knowledge of debt markets
- No experience with due diligence processes
