12/1/2023 0 Comments Define finance traunche![]() ![]() Watch Ryan Gosling’s hilarious explanation of tranche in The Big Short. Credit Facility: A credit facility is a type of loan made in a business or corporate finance context, including revolving credit, term loans, committed facilities, letters of credit and most. Dividing a financial product into parts can increase its saleability. To take advantage of this, an investment could split some assets, such as a CMO, into different parts so the first investor receives the early cashflows of a mortgage and the second investor has the right to receive the later cashflows. One investor might need cash in the short term only, while another might only want cash in the long term. These securities are split based on when they mature, such as in 2 years or 25 years, and then sold to investors based on their risk tolerance. Mortgage-backed bonds, such as collateralised mortgage obligations (CMO), often come in tranches. Traunch and tranche (cf.) effectively have the same meaning, as alternate spellings of the French word for slice or portion. There are many different kinds of tranches based on characteristics such as risk, time, or whether they are backed up by assets. Securities are sometimes broken up to make them easier to sell. ![]() The word is also used when talking about the portions of bailout cash handed out to Greece by the Eurozone. In finance, a tranche is a portion of a security, such as a loan, mortgage, stock, or bond, that can be sold to an investor. You may recognise the term from 2015 movie The Big Short, or articles on the sub-prime mortgage crisis. The CDO is structured according to the investors' needs. This provision helps the borrower if they are struggling to. Bespoke CDO: A type of collateralized debt obligation (CDO) that a dealer creates for a specific group of investors. The term is often used to describe a specific class of bond where each tranche has a varying degree of risk attached to it. Debt Accordions: A loan provision which allows the borrower to add additional investors to the loan subsequent to the initial loan date. Meaning ‘portion’ or ‘slice’ in French, the word tranche in financial circles refers to a security that can be split into smaller pieces and subsequently sold to investors. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |