In fixed rate CMBS securitizations the most senior AAA tranc

In fixed rate CMBS securitizations, the most senior AAA tranches (Class A-1) always have a short average life – as little as three years – a period that is always less than even the shortest term loan in the collateral pool. How is that accomplished?

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Solution

the most senior tranches are paid the maximum cash flow from the received cash flow. Cash flow from all the loans are used to service the tranches hence the most senior tranches have life lesser than other loans