Z-tranche

Z-tranche

The last tranche in a collateralized mortgage obligation. A Z-tranche accrues periodic interest but receives no cash payments until previous tranches from the same CMO are retired.
References in periodicals archive ?
Instead, a Z-tranche is credited "accrued interest" and the face amount of the bond is increased at the stated coupon rate on each payment date.
Although approximately 24% of the mortgage-backed securities are z-tranche securities, notorious for their potential volatility, Provident uses them to back disability income liabilities, and the particular securities purchased impose minimal interest-rate risk to the portfolio.
With regard to factors applied to asset classes, the longer-term factor credit for Z-tranche collateralized mortgage obligations (CMO) was decreased from 35% to 15%.
Although approximately 11% of the mortgage-backed securities are z-tranche securities, notorious for their potential volatility, Provident uses them to back disability income liabilities, and the particular securities purchased impose minimal interest rate risk on the portfolio.