First-loss: Difference between revisions

First-loss (view source)

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 Of potential claims against a given pool of assets, the “[[first-loss]]” is first one up against the wall when the revolution comes. This is to do with priority, preference and [[capital structure]].
-The first one for the early shower will be he whose claim is most ''[[subordinated]]''. That will be the [[Shareholder|common shareholder]], if there is one, and if not (in, say, a [[CDO]] or a [[structured note]] of some sort) it will be the one bringing up the rear in the [[security waterfall]]. That will usually be the Noteholder or, if there are several [[tranche]]s of Notes, the most [[junior]], most deeply [[subordinated]], ones.
+The first one for the early shower will be he whose claim is most ''[[subordinated]]''. That will be the [[Shareholder|common shareholder]], if there is one, and if not (in, say, a [[CDO]] or a [[structured note]] of some sort) it will be the one bringing up the rear in the [[security waterfall]]. That will usually be the noteholder or, if there are several [[tranche]]s of Notes, the most [[junior]], most deeply [[subordinated]], noteholder.
 It is only once the “[[first-loss]] piece” has been wiped out that the fellow holding the “[[second-loss]] piece” has anything to be worried about, much less the “[[super-senior]]” guy sitting at the top of the pile, usually clutching his a bogus [[Ratings notches|triple-A rating]] like a chewed cuddly rabbit with one ear that smells like sick.