What is a senior preferred note?

Senior Preferred notes represent the issuing bank’s direct, unconditional, and unsecured obligations. Secured Corporate Bonds. Secured corporate bonds follow a ranking structure where the senior "secured" debt holds the highest priority.

What are the different types of preferred securities?

Traditional preferred securities can be categorized into two common types – retail and institutional. Senior Non-Preferred Bonds. In case of liquidation or bankruptcy of a company, Senior Non-Preferred Bond is ranked higher than Subordinated Bonds but remains inferior to Senior Preferred Bonds or Senior Unsecured Debt.

What is a senior preferred bond?

Interest payments on Senior Preferred Bonds are typically fixed, meaning they have a predetermined interest rate paid at regular intervals, such as annually or semi-annually. The interest rate is set at the time of issuance and remains constant throughout the bond’s term.

What are traditional preferreds & how do they work?

Perpetual and Callable: Traditional preferreds are issued as perpetuals, i.e. with no stated maturity, but have call options typically at 5 or 10 years. Dividends, Not Coupons: Traditional preferreds pay dividends rather than coupons and in periods of severe stress the issuer may skip a payment without triggering a default.