Senior / Junior

Definition

Senior classes take priority over junior ones in the payment of interest and dividends and, above all, in a liquidation of the company. The typical order is: senior secured debt → senior unsecured debt → junior (subordinated) debt → preferred stock → common stock. Within the preferreds, there can be senior and junior series relative to each other. A preferred sitting in a more junior position compensates for the extra risk with a higher yield. At Strategy, all four preferreds rank pari passu with each other, senior to MSTR common stock, and junior to any debt.