One of a series of
Debt Securities secured by a single pool of
Receivables. The classes have different terms and conditions and rank in different orders in the payment Waterfall, leading to each class having varying levels of
Credit Risk. Different classes can be denominated in different currencies and have differing maturity dates. Also referred to as a Tranche.
Here are some examples of classes in securitisation:
- Senior tranches: These are the most senior classes of securities, and they have the lowest risk. They are typically paid first in the event of a default.
- Mezzanine tranches: These classes of securities have a higher risk than senior tranches, but they offer a higher yield. They are typically paid after senior tranches, but before junior tranches.
- Junior tranches: These are the most junior classes of securities, and they have the highest risk. They are typically paid last in the event of a default