Tranche is one of a number of related securities offered as part of the same transaction in structured finance but the term’s use in structured finance may be singled out as particularly important.
The term “tranche” is used in fields of finance other than structured finance. Tranche stands for series, portion, section or slice. From the financial point of view each and every bond is a different slice of the deal’s risk. In the world of investing, it is used to describe a security that can be split up into smaller pieces and subsequently sold to investors.
Tranche can be defined as different classes which can be identified by letters as Class A, Class B, Class C securities.