CDO


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CDO

Collateralized Debt Obligation

An asset-backed security backed by the receivables on loans, bonds, or other debt. Banks package and sell their receivables on debt to investors in order to reduce the risk of loss due to default. Returns on CDOs are paid in tranches; that is, the individual loans backing each CDO have different levels of risk, and investors are paid out according to the level of risk they have acquired. Banks offer higher interest rates to investors willing to buy CDOs backed by higher-risk loans. From a bank's perspective, in addition to reducing risk, CDOs also reduce their capital requirements because they can raise funds through the issue of CDOs. While, theoretically, CDOs can be backed by mortgages, one usually refers to these as collateralized mortgage obligations.

CDO

References in periodicals archive ?
Not only is this consistent with our strategy of financing all of our business lines through match funded structures, but CDO VI, like CDO IV, has the added benefit of significant re-investment flexibility for the next five years and a structure that will allow us to continue to select the portion of the capital structure that provides the most attractive risk/return profile.
Our consistent issuance in the CDO market, and the strong performance of the underlying collateral of our transactions, has resulted in the ability to significantly decrease the weighted average interest rate on CDOs of this type from approximately LIBOR plus 0.
The CDO loan collateral has migrated away from subordinate debt.
The CDO is well within all of its geographic location covenants with 20.
The $15 million pari passu B-note was performing as agreed and was contributed to another CDO managed by NS Advisors, LLC.
Proceeds from the issuance will be invested in a revolving portfolio of prime and subprime residential mortgage-backed securities (RMBS) and CDOs.
RREF CDO 206-1 will have a five-year reinvestment period, during which principal proceeds may be used to invest in substitute collateral subject to certain covenants and reinvestment parameters outlined in the governing documents.
RRE will be the collateral manager for RREF CDO 2006-1.
Fitch upgraded PPMA's CDO Asset Manager rating to 'CAM1' from 'CAM2' on May 19 based on the company's disciplined portfolio management process, its well documented and organized CDO procedures and controls, and the firm's experienced portfolio management team.
The current landscape of CDO asset managers has rapidly evolved in recent years, with many new entrants tapping the CDO market for financing rather than simply arbitrage.
Fitch's CAM rating service represents a strategic effort to assist investors in their manager selection process and to provide a context in which managers can develop sustainable CDO management practices.
To date, Fitch has met with over 90 CDO asset management teams globally since launching its Asset Manager Ratings program in 2001, with public ratings on 37 distinct managers averaging an overall CAM score of 2.