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Finance

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  • April 11, 2022
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Senior Tranche

A layer of loss absorption in a collateralized debt obligation (CDO) or any similar structures that is exposed to lowest risk, amongst other layers. A senior tranche is made up of the balance of the pool and serves as an absorbent of any residual losses (losses that cannot be absorbed by equity and mezzanine tranches).

Given the lowest degree of risk the holders of such a tranche may be exposed to, the senior tranche pays the lowest rate of interest.


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