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A senior tranche is the highest tranche of a security, i.e. the one deemed least risky. Any losses on the value of the security are only experienced in the senior tranche once all other tranches have lost all their value. For this safety, the senior tranche pays the lowest rate of interest.
Also know, what is a debt tranche?
Tranches are pieces of a pooled collection of securities, usually debt instruments, that are split up by risk or other characteristics in order to be marketable to different investors.
Correspondingly, what is a tranche investment?
"Tranche" is a French word meaning "slice" or "portion." 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. These securities can be partitioned based on, say, their maturities or their ratings to appeal to different buyers.
A junior tranche is the lowest tranche of a security, i.e. the one deemed most risky. Any losses on the value of the security are absorbed by the junior tranche before any other tranche, but for accepting this risk the junior tranche pays the highest rate of interest.