Planned Amortization Class Bond
These tranches have priority over the other tranches in the deal, which are then referred to as the support or companion tranches. There are usually several PAC tranches created. PAC-1, PAC-2, PAC-3 -- this requires some more explanation. PAC-2 refers to a support tranche that is given a scheduled payment structure like a PAC bond. For example, let's say you have a deal with a PAC tranche and a support tranche (i.e., a tranche that is a support tranche and is therefore subordinate to the PAC tranche) that has a scheduled payment structure like you did with the PAC bond. That support bond then is called the PAC-2 bond. If you continue, and create another support tranche that also has scheduled payments, that would become the PAC-3 bond. Prospectus will cover each class. Prospectus is at the level of an issue.
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