Tranche

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In structured finance, a tranche (often misspelled as traunch or traunche) is one of a number of related securities offered as part of the same transaction. The word tranche is French for slice, section, series, or portion, and is cognate to English trench ('ditch'). In the financial sense of the word, each bond is a different slice of the deal's risk. Transaction documentation (see indenture) usually defines the tranches as different "classes" of notes, each identified by letter (e.g., the Class A, Class B, Class C securities) with different bond credit ratings (ratings).

The term tranche is used in fields of finance other than structured finance (such as in straight lending, where multi-tranche loans are commonplace), but the term's use in structured finance may be singled out as particularly important. Use of "tranche" as a verb is limited almost exclusively to this field.

Read more about Tranche:  How Tranching Works, Benefits, Risks

Other articles related to "tranche, tranches":

Collateralized Debt Obligation - Transaction Participants - Investors
... have different motivations for purchasing CDO securities depending on which tranche they select ... leverage and hope to profit from the excess of the spread offered by the senior tranche and their cost of borrowing ... This is true because senior tranches pay a spread above LIBOR despite their AAA-ratings ...
Collateralized Mortgage Obligation - Prepayment Tranching - Z Bonds
... This type of tranche supports other tranches by not receiving an interest payment ... The interest payment that would have accrued to the Z tranche is used to pay off the principal of other bonds, and the principal of the Z tranche increases ... The Z tranche starts receiving interest and principal payments only after the other tranches in the CMO have been fully paid ...
Tranche - Risks
... to ensure that the desired characteristics, such as the seniority ordering the various tranches, will be delivered under all plausible scenarios ... As shown above, tranches from the same offering have different risk, reward, and/or maturity characteristics ... In case of default, different tranches may have conflicting goals, which can lead to expensive and time-consuming lawsuits, called tranche warfare (punning on trench warfare) ...
Quadiary Cluster
... pairs of floater and inverse-floater tranches that are derived from a fixed-rate tranche ... Specifically, each cluster will contain the following tranche types Floating-rate tranche Inverse floating-rate tranche Floating-rate interest-only tranche Inverse floating-rate interest-only tranche ...
Eurofighter Typhoon - Development - Orders
1998 contracts were signed for production of 148 Tranche 1 aircraft and procurement of long lead-time items for Tranche 2 aircraft ... In March 2008 the final aircraft out of Tranche 1 was delivered to the German Air Force, with all successive deliveries being at the Tranche 2 standard ... On 21 October 2008, the first two of 91 Tranche 2 aircraft, ordered four years before, were delivered to RAF Coningsby ...