Collateralised Debt Obligation. A collateralised debt obligation (CDO) is an investment-grade security backed by a pool of different kinds of debt - including both bonds and other types of loan. The principle behind CDOs is the same as that underlying collateralised mortgage obligations (CMOs) and collateralised bond obligations (CBOs); namely, the pooling of a group of other assets to create the credit quality which supports the collateralised instrument.

Collateralised Dept Obligation

Collateral Debt Obligation vehicles

Collateralized Debt Obligations

an investment collateralized by or referenced to a diverse portfolio of debt. The investor is exposed to losses above and below certain thresholds or once more junior classes of notes absorb losses. The collateral pools that are back CDOs can be static or managed. If managed, the manager receives a fee for advising on the composition of the portfolio and has discretion to recommend the sale and purchase of assets

Collateralised Debt Obligation. A note whose cash flows are linked to the incidence of default in a pool of debt instruments is called a CDO. When the underlying collateral in a CDO is made up of bonds, it is called a Collateralised Bond Obligation (CBO). When the underlying collateral in a CDO is made up of loans, the CDO is usually called a Collateralised Loan Obligation (CLO).

Collateralized debt obligation.

Collateralised Debt Obligation. American term for type of bond backed by a pool of bonds, loans and other assets. Payment of the principal and interest of the CDO is financed with the cash flows generated by the underlying financial assets. CDO is a class of asset-backed securities.