Jurisdiction(s):
United Kingdom

Key definition

Senior Debt definition

What does Senior Debt mean? In finance transactions, Senior debt is the borrower’s indebtedness intended to be paid ahead of other debt, typically owed to the senior lenders under the senior facilities. It is usually secured, guaranteed and contractually protected so that, on enforcement or insolvency, it ranks in priority to subordinated, mezzanine or other junior debt and equity. The term is not defined by statute or case law; its scope is set by the finance documents and the intercreditor agreement. Definitions commonly include principal, interest, fees, indemnities, break costs and designated hedging and ancillary liabilities, and exclude subordinated obligations. Among senior creditors...

Project Finance Development Term Loan Facilities: Repayment Profiles, Voluntary and Mandatory Prepayment (Cash Sweeps, Compensation/Insurance Proceeds), Cancellation Rights, Mini-Perms and Hedging Break Costs

Published by a LexisNexis Banking & Finance expert

Practice notes

Where a facility is committed, exactly how and when the facility is to be repaid will be set out in the facility agreement (ie terms of repayment).

Committed facility agreements generally also set out:

whether the borrower may repay before the agreed repayment date(s) (ie make a voluntary prepayment), together with any conditions for such prepayments, such as minimum amounts or fees payable, and
whether any events require the borrower to repay all or part of the facility early (ie make a mandatory prepayment)

Project finance is typically provided as senior debt, usually via a development term loan facility used to fund the project’s development and/or construction costs.

This Practice Note outlines the types of:

repayment provisions
prepayment provisions, and
cancellation provisions

that are commonly found in a project finance development term loan facility. It includes examples of how these provisions may differ from the typical repayment, prepayment and cancellation provisions seen in a corporate term loan facility, and discusses some of the reasons for these...

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Web page updated on 21/05/2026

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