Senior Convertible Note Definition
Refers to notes that can be exchanged for stock in the issuing corporation. These notes incorporate a debt security with an option where the note will be converted into a certain amount of the issuer's shares. A senior convertible note takes priority over all other debt owed by the issuer. Convertible notes are a way for a firm to raise money to fund its operations. As the investor gets two benefits compared to a normal bond issue (a call option and priority if the issuer goes bankrupt), the interest offered is usually lower than on other bonds.