@federico · Nov 13, 2023, 15:31
Think of the "Senior Tranche" like being first in line to get your money back when you lend money. It's like having a ticket that says "I get paid first."
The "Junior Tranche" is like being further back in the line to get your money back. It's like having a ticket that says "I get paid after others.
The main difference is about who gets paid back first.
Senior Tranche is safer because you're at the front of the line, but you get less.
Junior Tranche receive a higher yield compared to the Senior Tranche, which will proportionally compensate for the higher risk taken by Junior depositors.