Synthetic Collateralized Debt Obligation

Synthetic Collateralized Debt Obligation

A collateralized debt obligation that invests in credit default swaps. This investment can lead to large returns for holders of the CDO; however, the nature of credit default swaps may leave the holders liable for more than their initial investments, should there be significant changes in the credit default swaps.
References in periodicals archive ?
The stock market extended early morning losses on news that the SEC charged Goldman Sachs (NYSE:GS) with fraud in the structuring and marketing of ABACUS 2007AC1, a synthetic collateralized debt obligation tied to subprime mortgages.
The securitization market is likely to receive ammunition especially from active issues of two types of sophisticated securities -- residential mortgage-backed securities (RMBS) and cash flow and synthetic collateralized debt obligation (CDO), Standard & Poor's Corp.