A slice of a financing or securitisation with its own risk, return, and priority of repayment; senior tranches are paid first, junior tranches carry more risk for higher yield.
Related terms
- Weighted average cost of capital (WACC)
The average rate a project must earn to satisfy all its capital providers.
- Working capital
Current assets minus current liabilities; the short-term liquidity a business or project needs to fund day-to-day operations before longer-term cash flows arri…
- Amortisation
The gradual repayment of loan principal over time through scheduled payments.
- Balloon payment
A large lump-sum principal repayment due at the maturity of a loan that was only partially amortised over its term, forcing a refinancing or sale.
- Basis point (bps)
One hundredth of a percentage point (0.01%); the standard unit for quoting changes in interest rates, yields, and fees — 100 bps equals 1%.
- Bridge loan
Short-term financing (typically under three years) used to acquire, stabilise, or reposition an asset until permanent financing or a sale is arranged; priced h…
- Capital adequacy
A regulatory measure of whether a bank or lender holds enough capital against its risk-weighted assets to absorb losses; tighter rules directly affect real est…
- Capital stack
The layered structure of financing in a deal, from senior debt at the bottom to equity at the top.