collateralized bond obligation (CBO)
Definition
Debt financing mechanism that converts junk grade bonds into an investment grade asset based security (ABS). In this arrangement, a bank's portfolio of low-rated bonds (as the underlying collateral for an issue of CBO) is transferred to a specially created corporation or trust (called special purpose vehicle or CPV) which has no other assets and manages the issue. Typically, a CBO is issued at two or more levels (called tiers or tranches) with different degrees of risk and rates of interest.
collateralized bond obligation (CBO) is in the Banking, Commerce & Finance, Investing and Securities & Futures Trading subjects.
collateralized bond obligation (CBO) appears in the definitions of the following terms: collateralized loan obligation (CLO) and collateralized mortgaged obligation (CMO)
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