Talk:Tranche

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Example

Why does the example use risk transfer via CDS rather than a more straightforward purchase? A synthetic CDO backed by governtment obligations is certainly a valid structure but it would seem to obscure the real mechanics. Bongomatic (talk) 02:24, 14 April 2008 (UTC)[reply]

Origin of "tranche"

Does anyone know the significance of "traunche" v. "tranche" ... I have seen both usage. Is the first a spelling mistake or ...

Yes, I think so -- people think that the term, being French, ought to have a "u" in it somewhere... (or maybe people are subconsciously thinking of the word "raunchy"?)

RH: tranche is found in several online dictionaries, and is from the old French for 'slice' (c.f. 'trench'). 'traunch' is not found in the same sources, and is therefore probably a mis-spelt form of 'tranche'. This particular spelling likely arose from the way in which an English-speaker would pronounce the word as it is actually pronounced in French, with the 'au' sounding like the 'o' in the word 'long'. Without the Anglophone knowing how to pronounce the word in French, he would otherwise pronounce 'tranche' like 'ranch'.

"Traunche" or "traunch" (which I have seen more frequently, usually in e-mail from senior management of investment banks) is a misspelling. Bongomatic (talk) 02:24, 14 April 2008 (UTC)[reply]

International Monetary Fund tranches

Somebody with some time should write up a description of tranche as used by multilateral financial organizations (especially the International Monetary Fund). Within structural adjustment lending programs, loans were given out in 'slices', or tranches. Subsequent tranches were in theory supposed to only be given if countries restructured their economies as specified by structural adjustment conditionalities.

--Imagine&Engage 12:07, 23 October 2005 (UTC)[reply]

Does anyone know what the seminal papers on tranches are? I am interested in the 'pooling' process and its potential application to other areas of economics. Much thanks.

Proteomics link?

Why is there a large and prominent link to a proteomics website? Finnancier 11:30, 29 September 2007 (UTC)[reply]

The link exists because Tranche is the name of a widely used proteomics tool. The tool is also used by other areas of science. It is similar to BitTorrent, but redesigned to securely share scientific data. —Preceding unsigned comment added by Jaysonfalkner (talk • contribs) 20:02, 21 March 2008 (UTC)[reply]

That may be what another use of the word is, but that should be settled in a disambiguation page, not in a see also. That link should be removed. —Preceding unsigned comment added by 99.233.76.7 (talk) 21:47, 18 July 2008 (UTC)[reply]

Indentured Bond

I took a finance class, here in the U.S., and this was called an indentured bond by the book. I'll see if I can get the name of the book. —Preceding unsigned comment added by 12.168.6.143 (talk) 20:31, 19 December 2007 (UTC)[reply]

I am a structure finance lawyer. I think your book may be using an outdated definition. Indentures are widely used through-out finance regardless of the type of obligation, witness, for example, the federal regulation of many indentures under the Trust Indenture Act of 1939, as amended. As the following discussion will show, "indentures" are best thought of as instruments used throughout finance without regard to the method of finance.

Bonds are debt obligations. Structured finance products may or may not involve debt obligations. Thus, "bonds" does not entirely comprehend the field of structured finance. Indentures (properly "indentures of trust" or "trust indentures") are the instruments under which structured products are issued.

Pre-19th century, an indenture was an agreement between two people that was "indented", torn in two with a large, regularly jagged, edge. The protrusions on one piece fitted into the "dents" on the other piece; thus "authenticating" the document --- proving that each was part of the same document.

Indentures were prevalent in real estate transactions and were adapted in the 19th century for use in railroad finance (without the tearing in two). Railroads borrowed money (issued bonds) secured by mortgages. The bonds were issued under indentures which also served as the mortgages; hence, an indentured bond was a bond secured by a mortgage. The railroad continued to own the property, but the trust indenture put a lien (the mortgage) on the property. In this situation an indenture provides security to the bondholders that the railroad will pay the bonds. The trust indenture is a "security device".

Later, in the early 20th century, corporations began borrowing money by the issuance of bonds, but these bonds were unsecured. Unsecured bonds are known as "debentures", and the instruments under which they are issued are "debenture indentures"; thus expanding the use of the term "indenture".

The first structured products (circa 1985) were "pass-throughs". A trust was created by a trust indenture, to hold assets(mortgages, credit receivables, etc.), and the trust issued certificates evidencing ownership of the assets. Payments received on the assets were passed-through to the investors holding the certificates. In this situation, the trust indenture is not a security device (as in the case of indenture bonds) but a depository with independent legal existence. It is recognized by law as a "person", a "juridical entity". Under tax law, though, the trust may be invisible (a "grantor trust"), and the owners of the assets are the holders of the certificates.

One type of structure product involves putting bonds (issued, themselves, under indentures) into trusts (created by indentures) which issue pass-through certificates evidencing ownership of the bonds.

E-6B (talk) 16:44, 3 January 2008 (UTC)[reply]

Equity tranche

Is equity tranche just another name for what is described here?90.190.225.121 (talk) 09:17, 7 March 2008 (UTC)[reply]

Tranche actually has quite a different meaning in venture capital. It refers to an investment where portions of the money are released to the company over time as they meet certain predefined milestones. I can write a more detailed article about it if it makes sense. —Preceding unsigned comment added by Cdixon2000 (talk • contribs) 13:04, 15 August 2009 (UTC)[reply]