Tranche

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Term to describe a specific class of bonds within an offering, usually each tranche offers varying degrees of risk to the investor. Each tranche within the offering can offer a different coupon, expected loss, attachment probablity and exhaustion point. Separate tranches within an offering can also cover different perils (earthquake, hurricane and so on), geographies and utilise differing triggers (indemnity, parametric, industry loss index and so on).

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