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Main Real Estate Terms tranche

tranche



one of the classes of debt securities issued as part of a single bond or instrument, from the French word tranche, meaning slice.Securities often are issued in tranches to meet different investorobjectives for portfolio diversification. For example, aCollateralized Bond Obligationis a mortgaged-backed security issued with several different bond tranches issued under a single bond indenture, ranging from a fast-pay bond to a long-term slow-paybond (called theaccrual bond, or the Z-bond). Each is paid offconsecutively- as one bond matures, the next is paid down in a steppingstone progression. Each tranche has a different coupon andmaturity, and is identifiable by a differentcusip number. separate borrowings or funding commitments under aterm loanor other credit facility. Amulticurrency loan will be structured with a U.S.dollar tranche, a deutschemark tranche, and so on. WorldBank advances to a sovereign borrower are structured in tranches. single maturityCertificate of Deposit sold by a lead bank, which is then divided into smaller denominations for placement with investors. gold tranche: first 25% of a member country's contribution to the International Monetary Fund, normally in gold bullion. reserve tranche: deposit balances subject toreserve requirements.

Dictionary of Real Estate Terms tranche

a section of aMortgage-Backed Security, differentiated by maturity or by risk.

Examples: Collateralized Mortgage Obligations (CMOs)were issued, backed by 30-year amortizing mortgages. The CMOs were sold in five-year tranches, with investors getting interest plus the principal back at different intervals based on which tranche they acquired. In the sale of CMOs, one investor group acquired the rights to the first 80% of principal retired, another group to the next 10%- the final 10% will go to investors who accepted the highest risk of repayment.

Dictionary of Business Terms tranche

in aCollateralized Mortgage Obligationor aREMIC, a separately priced and marketed ownership interest that entitles the investor to income from a mortgage pool with an expected maturity within specified limits. This is done by assigning each tranche a priority from loan principal repayments. The higher the priority, the shorter the maturity of the tranche. For example, the typical CMO has A, B, C, and Z tranches, representing fast-pay, medium-pay, and slowpay mortgages.

Referring Terms: credit tranche
hedge/hedging
Z-bond


Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.Copyright © 2004, 2000, 1997, 1993, 1987, 1984 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.

tranche