The simplest version of a tranche. That is, a tranche that has no extra features other than its basic form. A vanilla tranche is exposed to extension risk or prepayment risk, so it offers a yield exceeding that of tranches such as a PAC tranche or a TAC tranche, but lower than the yield on a companion tranche.

Vanilla tranches are priced by separating coupon legs and default legs.

It is also known as a standard tranche or a classic tranche or a plain vanilla tranche.