Tranches

Subject: Bonds - Tranches A 'tranche' (derived from the French for 'slice') is used in finance to define part of an asset that is divided (sliced, hence the term) into smaller pieces. A common example is a mortgage-backed security.

Junior/Senior tranches: The entire debt is divided into so-called junior and senior tranches with the former bearing all the first losses. Thus, the credit standing of the remaining senior tranches is raised considerably.

Example: For example, a CBO might have senior, junior (or mezzanine), and subordinated (or equity) tranches. The senior tranche, like senior debt, has first claim on the collateral's cash flows to cover its interest and principal payments.

Collateralized mortgage obligation (CMO)A security backed by a pool of pass- throughs, structured so that there are several classes of bondholders with varying maturities, called tranches.

A single issue of CMOs contains two or more classes of bonds called tranches, each with a different length of maturity, providing a form of call protection to the holder of a CMO.

A Z-tranche that may start receiving principal payments before prior tranches are retired if market forces create a "triggering" event, such as a drop in Treasury yields to a defined level, ...

Companion bonds are sometimes known as support or companion tranches. The companion bond serves the function of assimilating any excess in the principal payments when a period of high prepayment speed is taking place.

A type of mortgage-backed security that is backed by mortgage pools and this is documented and sold as a collection of separate bonds called tranches.

A single collateralized mortgage-backed security is divided into several different classes, or tranches, each class containing a unique risk profile and characteristics.

A security underpinned by a bunch of pass-through rates, structured so that there are several classes of bondholders with varying maturities, called tranches who get paid at different times.

The bonds are issued in two tranches: in the first tranche repayment increases with the price of the other security, and in the second tranche repayment decreases with the price of the other security.

A security backed by a pool of pass-through rates, structured so that there are several classes of bondholders with varying maturities, called tranches.

Tranche One of several related securities offered at the same time. Tranches from the same offering usually have different risk, reward, and/or maturity characteristics.

* Collateralized debt obligation CDO: Generic term for a bond issued against a mixed pool of assets - There also exists CDO-squared (CDO^2) where the underlying assets are CDO tranches.

They are a type of mortgage-backed security backed by mortgages on commercial rather than residential real estate. CMBS issues are usually structured as multiple tranches, similar to CMOs, rather than typical residential "passthroughs." ...

Used by traders and back-office units, this is attributed by Sicocam SA in its role as Agence Française de Codification (AFC). When a single issue involves securities with different features - i.e., for different tranches/maturities of a given ...

See also: Bonds, Investment, Interest, Issue, Bond