Z-Tranche - Definition

The last tranche in a collateralized mortgage obligation. A Z-tranche accrues periodic interest but receives no cash payments until previous tranches from the same CMO are retired.

This type of tranche supports other tranches by not receiving an interest payment. The interest payment that would have accrued to the Z tranche is used to pay off the Principal of other bonds, and the principal of the Z tranche increases. The Z tranche starts receiving interest and principal payments only after the other tranches in the CMO have been fully paid. This type of tranche is often used to customize sequential tranches, or VADM tranches.



Terms near "Z-Tranche"

Zacks Investment Research
ZAR
Zero Balance Account (ZBA)
Zero Basis Risk Swap (ZEBRA)
Zero Bound
Zero Cost Collar
Zero Coupon
Zero Coupon Bond
Zero Coupon Inflation Swap
Zero lot line
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