Junior Tranche

Junior Tranche

Glossary
Banking

Junior Tranche

The junior tranche of a securitisation, also known as the equity tranche, is the lowest-rated tranche or is unrated. Junior tranches are typically retained by the securitisation sponsor. Junior tranche holders are the last to receive payment in the typical cash waterfall structure after holders of more senior tranches. As such, junior tranches have much higher yields.

Related terms