Senior debt is debt backed by specific guarantees and repayment of which has priority over other debt (subordinated debt).

In other words, senior debt can be described as privileged debt.

In practice, let’s imagine that a wind farm project, the Sainte-Lizaigne project for example, raises 300,000 euros from Enerfip, and that this debt is denominated “senior debt”. The same project subsequently takes out a bank loan of 23 million euros from bank X to make the investments needed to build the project, in the form of subordinated debt (junior debt). If, for any reason, the company that raised the funds is liquidated, the available funds will be used first to reimburse the Enerfip contributors up to the amount of their commitments, and then, if there is any money left over, to reimburse the other creditors, including bank X.

This example is for illustrative purposes only, and the reverse may also be true. It may be that the equity financing is subordinated debt, while the bank loans are senior debt. It is therefore important to clearly identify on the project cards the debt rank of the project you are considering for investment.

Please refer to the Terms and Conditions for further details