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Tranches

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Tranches

What Does Tranches Mean?

Refers to a piece, portion, or slice of a deal. The portion is one of several related securities that are offered simultaneously, but with each having different risks, rewards, and/or maturities. “Tranche” is the French word for “slice.”

Investopedia explains Tranches

This is a term often used to describe a specific class of bonds within an offering in which each tranche offers varying degrees of risk to the investor. For example, a collateralized mortgage obligation (CMO) that offers a partitioned mortgage-backed security (MBS) portfolio might have mortgages (tranches) that have 1-year, 2-year, 5-year, and 20-year maturities. Tranches can also refer to segments that are offered domestically and internationally.

Related Terms:
Asset-Backed Security
Collateralized Debt ObligationCDO
Collateralized Mortgage ObligationCMO
Mortgage-Backed SecuritiesMBSs
Underwriting



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