Junk Tranche
Junk

The junk tranche is the most risky debt tranche of a security.

More About Junk Tranche

  • The junk tranche usually pays the highest rate and has the most risk
  • It is first to absorb losses after the equity trance is wiped out
  • Typically rated Double B or below
  • Can be referred to the "Junior Tranche" if there is no equity tranche