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Targeted Amortization Class

   Also found in: Acronyms 0.01 sec.
Targeted Amortization Class (TAC) bonds
Bonds offered as a tranche class of some CMOs, according to a sinking fund schedule. They differ from PAC bonds whose amortization is guaranteed as long as prepayments on the underlying mortgages do not exceed certain limits. A TAC's schedule is met at only one prepayment rate.


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Targeted Amortization Class (TAC) Tranches TAC tranches also provide more cash-flow certainty and a fixed principal payment schedule, based on a mechanism similar to a sinking fund, but this certainty applies at only one prepayment rate rather than a range.
 
 
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