Credit Facility Tranche
Credit Facility Tranche. An individual tranche of a Credit Facility.
Scope of Credit Facility Tranches
Tranches of a Credit Facility each have a stated purpose. A Credit Facility may include
- provision of loans
- credit finance
- other agreements that create a credit exposure.
The amount of each tranche of the credit facility sums to the total Credit Facility amount (This is the maximal amount of credit that can be extended to the potential borrower for the stated purpose). Many tranches are for loans. For retail borrowers these would be the only types of tranche. For other types of potential borrowers e.g. corporates, other tranches of credit facility may include for securitized debt (where the potential borrower is a corporation), or for guaranty provision.
One or more loans are issued against a tranche. Against the loan will be one or more draw downs. Credit Facility Amounts are distinct from Tranche Amount. The Loan Documentation will reference the Credit Facility.
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