What is seniority of tranche in SAP FS-BA-PM-CR - Credit Risk?

SAP Term: seniority of tranche

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: Key figure that defines the sequence within a tranch position. An example of the value this key figure has is junior.

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• Key Concepts: 
  Seniority of tranche is a concept used in Credit Risk Management (CRM) within the Financial Services (FS) Business Area of SAP. It is used to determine the order in which tranches of a loan are paid out. The seniority of a tranche is determined by its priority in the repayment process. 
  
  How to use it: 
  In order to use seniority of tranche, you must first define the tranches of a loan. Each tranche will have its own repayment terms and conditions, such as interest rate, repayment period, and repayment schedule. Once the tranches have been defined, you can assign a seniority to each tranche. The seniority will determine the order in which the tranches are paid out. 
  
  Tips & Tricks: 
  When assigning seniority to tranches, it is important to consider the risk associated with each tranche. Higher risk tranches should be assigned lower seniority, as they will be paid out last in the event of default. 
  
  Related Information: 
  For more information on Credit Risk Management in SAP Financial Services, please refer to the SAP Help Portal.