Tranche

In relation to a structured note issuance, (being debt securities in the form of bonds or notes which are divided into different "classes" of debt securities), a "tranche" denotes each class of notes comprising the same issue. A tranche will be assigned characteristics which may vary from those of other tranches, such as different rates of interest, repayment terms, credit rating and priority ranking); essentially affording each class a different risk profile to match the varying risk appetites of investors.

For more on tranched securities, see Practice note: overview, Collateralised loan obligations (CLOs): overview: Tranching.

In relation to a facility agreement, a loan may consist of a number of tranches (sometimes also referred to as alphabet notes), each with differing characteristics, such as availability periods, interest rates, repayment terms, currencies or maturity dates.