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.
While the presence of a Z-tranche can stabilize the cash flow in other tranches, the market value of Z-tranches can fluctuate widely, and their average lives depend on other aspects of the offering.