BROWSE

Z-Tranche

What is 'Z-Tranche'

A special type of bond class in a sequential pay collateralized mortgage obligation. This class of bond does not receive any interest or principal payments until all other tranches have been completely paid off. In a Z-tranche, the interest that is not paid is accrued and added to the principal for future interest calculation purposes.

Explaining 'Z-Tranche'

The main purpose of the Z-tranche is to speed up the maturity of the senior tranches by disbursing payment that the Z-tranche was supposed to receive to the higher priority tranches. Investors that possess long-term liabilities or those who worry about reinvestment risk would benefit from investing in a Z-tranche bond.


Further Reading


The road to financial stability: Capital regulation, liquidity regulation, and resolution
www.ijcb.org [PDF]
… 3For a discussion of the economics of liquidity regulation, especially its rela- tionship to … authority automatically converts debt into equity, starting with the Z tranche and then … the mechanisms through which time-varying capital requirements influence real economic activity are …

Changes in the US financial system and the subprime crisisChanges in the US financial system and the subprime crisis
papers.ssrn.com [PDF]
… 3For a discussion of the economics of liquidity regulation, especially its rela- tionship to … authority automatically converts debt into equity, starting with the Z tranche and then … the mechanisms through which time-varying capital requirements influence real economic activity are …

Derivatives: the ultimate financial innovationDerivatives: the ultimate financial innovation
onlinelibrary.wiley.com [PDF]
… 3For a discussion of the economics of liquidity regulation, especially its rela- tionship to … authority automatically converts debt into equity, starting with the Z tranche and then … the mechanisms through which time-varying capital requirements influence real economic activity are …

Financial innovations in leveraged commercial loan marketsFinancial innovations in leveraged commercial loan markets
onlinelibrary.wiley.com [PDF]
… 3For a discussion of the economics of liquidity regulation, especially its rela- tionship to … authority automatically converts debt into equity, starting with the Z tranche and then … the mechanisms through which time-varying capital requirements influence real economic activity are …

Economic and Regulatory Developments Affecting Mortgage Related SecuritiesEconomic and Regulatory Developments Affecting Mortgage Related Securities
heinonline.org [PDF]
… 3For a discussion of the economics of liquidity regulation, especially its rela- tionship to … authority automatically converts debt into equity, starting with the Z tranche and then … the mechanisms through which time-varying capital requirements influence real economic activity are …


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