Credit Tranche

AAA

DEFINITION of 'Credit Tranche'

A system used by the International Monetary Fund (IMF) to govern its lending activities to member countries. When a member nation applies for a loan to help with balance of payment difficulties, the IMF will disperse the loan in a series of credit tranches. Tranches are a portion of the loan that is released upon the member country fulfilling conditions or requirements set forth by the IMF.

INVESTOPEDIA EXPLAINS 'Credit Tranche'

An International Monetary Fund loan usually lasts between 18 months and three years. At the start of the loan, the borrowing nation must demonstrate that reasonable efforts have been taken to overcome its financial difficulties. If this requirement is met, the country will receive the first credit tranche of the loan, usually 25% of its total value. The later series of credit tranches will have various conditions, each of which the borrower must satisfy before receiving the next portion of funding.

RELATED TERMS
  1. Balance Of Payments (BOP)

    A record of all transactions made between one particular country ...
  2. Unitranche Debt

    A type of debt that combines senior and subordinated debt into ...
  3. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. ...
  4. Balance Of Trade - BOT

    The difference between a country's imports and its exports. Balance ...
  5. Fiscal Deficit

    When a government's total expenditures exceed the revenue that ...
  6. Debtor Nation

    A nation with a cumulative balance of payments deficit. A debtor ...
Related Articles
  1. Understanding Capital And Financial ...
    Bonds & Fixed Income

    Understanding Capital And Financial ...

  2. What Is The World Bank?
    Insurance

    What Is The World Bank?

  3. An Introduction To The International ...
    Fundamental Analysis

    An Introduction To The International ...

  4. What Is The Bank For International Settlements?
    Personal Finance

    What Is The Bank For International Settlements?

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  4. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  5. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center