Tranching

Travessia's tranching system separates credit exposure into different risk layers.

After onboarding, the operator is required to provide capital into a junior tranche. This junior tranche is designed to absorb defaulted invoices before senior investors are affected.

If an invoice defaults, junior capital can automatically buy up the defaulted invoice or absorb the loss according to the vault rules. This improves on standard legal recourse because protection is not only based on pursuing the borrower after default. It is built into the structure.

The junior tranche may also be open to outside investors who want to earn a premium above the base vault rate in exchange for taking first-loss risk.

Problem Solved

Not all investors want the same risk-return profile. Some investors want senior exposure with more downside protection. Others are willing to take junior risk for higher yield. Tranching allows Travessia to serve both groups.

It also strengthens investor protection because the operator has capital at risk beneath senior investors. This creates alignment between the operator and the vault. The structure is designed to make trade finance credit easier to understand for institutional investors by separating senior capital from junior / first-loss capital.