Targeted Amortization Class - TAC

外汇网2021-06-19 20:57:03 189

A type of credit derivative that is similar to a planned amortization class (PAC) in that it protects investors from ppayment; however, it is structured differently than a PAC. TACs protect investors from a rise in the ppayment rate or a fall in interest rates. They do not protect from a fall in the ppayment rate like PACs.

|||The TAC is essentially a bond under a collateralized mortgage obligation (CMO). Under a TAC, the principal is paid on a pdetermined schedule. Any ppayment that occurs is amortized in order to maintain the schedule. TACs are inferior to PACs because they only provide one-sided ppayment protection.

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