A question of structure

Tranching

"Credit tranching is what creates the financing efficiency of the CDO; it's what creates the arbitrage." That was the opinion of Bear Stearns in a primer published in 2002. A common term used to describe the tranching concept of CDOs is the so-called 'waterfall' structure. The waterfall payment system describes the process by which holders of the most senior notes are paid in full first, with whatever is left after such payments have been made filtering down to more junior classes. The upper

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: