CDO squared

A CDO in which the underlying asset pool contains tranches of other CDOs.

CDO Squared

Slang; a collateralized debt obligation collateralized by other collateralized debt obligations rather than directly by debt. A CDO squared may have less risk than a regular CDO, as it has more underlying debts.

References in periodicals archive ?

Having a single number like the correlation coefficient to estimate risk greatly simplified the problem of determining risk and led to an enormous growth in CDOs--and not only CDOs, but bundles of them known as CDO squared or CDO2 or even higher powers.

If the invisible hand of the free market is dead, has capitalism been buried along with it?

"Complex products, such as CDO squared, have such a remote link from the asset that you can't tell when it is defaulting.

Inherent conservatism shields sector from ravages of Western banking

"The really complex products like CDO squared, which has such a remote link from the asset that you can't tell when it is defaulting, can't happen in Islamic finance because debt cannot qualify as an asset," said Dubai-based law firm Clifford Chance head of capital markets Debashis Dey.

Credit crisis may boost Islamic banks

"The CDO squared bonds are made up of middle or mezzanine tranches of the CDO asset-backed securities and are also sold in tranches," Dinallo said.