Which type of debt generally has lower interest rates?

Senior debt generally has lower interest rates because it is considered to be less risky compared to other types of debt. It has the first claim on assets and is prioritized in the capital structure during liquidation or bankruptcy proceedings. Lenders perceive senior debt as a safer investment because they assume they will be repaid before other creditors in the event of financial distress. This safety translates into reduced interest costs for borrowers, making senior debt more attractive than subordinated, convertible, or high-yield debt options, which come with higher risk and, consequently, higher interest rates.