What Is A Senior Tranche?

Josh Pupkin

Reviewed by

Josh Pupkin WSO Editorial Board

Expertise: Investment Banking | Private Equity

A senior tranche is the highest tranche of a security, i.e. the one deemed least risky. Any losses on the value of the security are only experienced in the senior tranche once all other tranches have lost all their value. For this safety, the senior tranche pays the lowest rate of interest.

The senior tranche may also be split into senior and super-senior tranches. Of the total value of a security the senior tranche is usually the largest, sometimes comprising up to 80% of the entire security.

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Josh Pupkin

Josh Pupkin is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. Josh has extensive experience private equity, business development, and investment banking. Josh started his career working as an investment banking analyst for Barclays before transitioning to a private equity role Neuberger Berman. Currently, Josh is an Associate in the Strategic Finance Group of Accordion Partners. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.