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While issuers in recent years generally preferred term loans to bonds, last month, Dun & Bradstreet, TransDigm and CommScope increased the size of their secured bond tranches in response to investor demand.
Under QE, the ECB is believed to be ready to supplement its existing purchase of corporate bonds with tranches of government debt following a meeting of its governing council on Thursday.
The insurer will sell bonds in two tranches: a $500 million issue of bonds that mature in January of 2014 and a $1.5 billion issue of bonds that mature in December of 2020.
The debt obligation, thus packaged and affirmed, was divided into tranches — bonds rated from an inflated AAA at the top to worthless at the bottom.
Instead, the bonds are divided into "tranches," and one tranche must be repaid before payment on the next can begin.
Nokia currently has two tranches of credit bonds outstanding: bonds of €1.25 billion euros at 5.5percentt maturing in 2014 and €500 million of notes at 6.75percentt due in 2019.
The model for correlation came from other securities in which corporate bonds were pooled in tranches.
The first tranches of bonds, offering 6.85% and a sovereign guarantee, were oversubscribed.
It requires bondholders – including some private investors who own certain tranches of bonds – to take heavy losses.
Tranches of bonds are constructed on the basis of the expected loss ratio from motor insurance policy holders' groups.
A whole range of products, from bonds to super senior tranches of CDOs exhibit this same property of yielding steady (if unspectacular) returns in good times, and then going quite horribly wrong in bad ones.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com