Glossary Term: ACCRETION BOND
Definition(s) for ACCRETION BOND:
1. ) This is the same as a Z tranche. A Z tranche is a CMO tranche. Except for jump Z tranches, owners of the Z tranche receive no cash flow from underlying mortgage collateral until the other tranches are retired. During the period when other tranches are still outstanding, the owners of the Z tranche receive credit for periodic interest. Those credits increase the face value of the tranche but are not paid to the owners. The Z bond may be, but does not have to be, the last tranche in a CMO structure that is retired. Sometimes also known as an accrual bond.
|
Fund Letters
