Tranching

Some articles on tranching:

Collateralized Mortgage Obligation - Credit Protection - Credit Tranching
... In the simplest case, credit tranching means that any credit losses will be absorbed by the most junior class of bondholders until the principal value of their ...
Collateralized Mortgage Obligation - Coupon Tranching
... This coupon stream allocation is performed after prepayment tranching is complete ... If the coupon tranching is done on the collateral without any prepayment tranching, then the resulting tranches are called 'strips' ... In general, coupon tranching will produce a pair (or set) of complementary CMO tranches ...
Tranche - Risks
... Tranching poses the following risks Tranching can add complexity to deals ... Beyond the challenges posed by estimation of the asset pool's loss distribution, tranching requires detailed, deal-specific documentation to ensure that the desired ...
Tranche - Benefits
... Tranching offers the following benefits Tranches allow for the "ability to create one or more classes of securities whose rating is higher than the average rating of the underlying ... Thus, due to the credit support resulting from tranching, the most senior claims are expected to be insulated - except in particularly adverse circumstances - from default risk of the underlying asset pool ...
Structured Finance - Structure - Tranching
... Tranching is an important concept in structured finance because it is the system used to create different investment classes for the securities that are ... Tranching allows the cash flow from the underlying asset to be diverted to the various investor groups ... The Committee on the Global Financial System explained tranching succinctly "A key goal of the tranching process is to create at least one class of securities whose ...