CDO squared

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 ?
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.
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.