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).

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