Equity in securitisation is known as "equity tranche". It is the most junior tranche of a securitisation, and it is the first to suffer losses if the underlying assets default. The equity tranche is typically held by the securitisation issuer or by a special purpose vehicle (SPV).
The equity tranche is often used to provide credit enhancement for the other tranches of the securitisation. Credit enhancement is a financial guarantee that is provided to investors to protect them from losses. The equity tranche is the most expensive tranche to finance, and it is the most risky tranche.
Investors who purchase equity tranches are typically looking for high yields and the potential for capital appreciation. However, they should be aware of the high risks involved in investing in equity tranches.