CDO squared

CDO squared

A CDO in which the underlying asset pool contains tranches of other CDOs.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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.
"Complex products, such as CDO squared, have such a remote link from the asset that you can't tell when it is defaulting.
"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.