Securitized financial products, such as asset-backed securities (ABS), are issued in class or in slices of securities with their own rating. The slices are classified by the former as subordinate or junior. Establishing a senior/subordinated structure is one of the most popular techniques for creating internal credit enhancements. The cash flows generated by the asset are allocated, with different priorities, to different seniority classes. The senior/subordinated structure therefore consists of several slices, from the oldest to the lowest (or junior). Subordinated slices act as protective layers for higher priority slices. The highest seniority bracket has the first right to cash flow. A company that improves credit assures a lender that it will meet its commitment. This can be achieved in a number of ways: in the financial sector, credit enhancement can be used to reduce the risks to investors of certain structured financial products. A cash guarantee account (CCA) will enhance the credit if the issuer lends the amount of credit support required to a commercial bank and then pays the money into short-term business documents with the highest credit quality available. Since a CCA is a cash contribution, a downgrade of the CCA supplier`s rating would not result in a similar degradation of safety.  A company that borrows money by issuing a loan can use the increase in credit to reduce the interest rate it must pay to investors.
If the entity can obtain a guarantee from a bank to ensure a portion of the repayment, the rating of the issuance of BBB bonds to AA could improve. The bank guarantee has strengthened the security of the capital and interests of the bond issue. The issuer can now save money by offering a slightly lower interest rate on its bonds. A bank promises a loan-to-pay to reimburse the issuer for any cash shortfalls from the guarantees, up to a specified amount. Secured bonds are insurance policies that pay back losses to UNWTO. These are external forms of credit enhancement. The ABS, together with guarantee bonds, have the same ratings as the issuer of the guarantee obligation.  Under the law, guarantee companies cannot provide a loan as collateral for credit enhancement. Credit enhancements are assigned to the highest rated tranches, with priority given to their purchasers for all claims for repayment of the underlying assets. Junior tranches carry the greatest risk and pay the highest returns. If a loan defaults in the pool, each loss is compensated by the junior tranches.
A reserve account is created to reimburse the issuer trust for losses, up to the amount allocated to the reserve. To increase credit support, the reserve account will often not decrease over the life of the security, which means that the account will increase proportionately up to a certain amount, since the outstanding debts will be repaid.  The Company could also increase its cash reserves or take other internal measures to demonstrate its ability to repay its debts.