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.
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.
Bond bind: Dinallo cites CDO's, securitization testimony to congress
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