medium · Corporate Credit Analysis cap-structure

In the context of 'Lien' priority, what is a 'Purchase Money Security Interest' (PMSI)?

1. A lien on a specific asset that gives the lender priority if they provided the funds to buy that asset.
2. The contractual right of a company to repurchase its own bonds at a fixed 50% discount to par in the open market.
3. A penalty fee paid to existing lenders whenever the company is acquired by a competing strategic buyer.
4. A standby guarantee issued by a bank to ensure that a company's trade suppliers are paid on time.

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