# Senior tranche

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- Post ID: 589672
- Modified: 2023-07-25T21:13:56+00:00
- Language: en

## Definition

In a true sale securitization, those bondholders who are the last to be liable for losses in the event of defaulting debtors, after the holders of the first-loss tranche (junior tranche; equity tranche, junior tranche] and the mezzanine tranche. Accordingly, they bear a lower risk, but they also draw a lower interest rate. The low-risk senior tranche is particularly attractive for insurance companies as well as for capital management companies and pension funds. - Sometimes the senior tranche is broken down into further sub-tranches, each of which has the same credit rating but a different maturity date. This makes the securities in question particularly suitable for investors who need to plan their liquidity (on a day-by-day basis). - See originate-to-distribute strategy, subordinated debt, tranche thickness, true sale securitization, waterfall principle, special purpose vehicle. - Cf. ECB Monthly Bulletin, February 2008, p. 91 (sub-tranches). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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