Collateralized Bond Obligation

(redirected from Collateralized Bond Obligations)

Collateralized Bond Obligation (CBO)

Investment-grade bonds backed by a collection of junk bonds with different levels of risk, called tiers, that are determined by the quality of junk bond involved. CBOs backed by highly risky junk bonds receive higher interest rates than other CBOs.

Collateralized Bond Obligation

An asset-backed security backed by the receivables on junk bonds. Issuers of CBOs package and sell their receivables on bonds they hold to investors in order to reduce the risk coming from defaults. Returns on CBOs are lower risk than the individual bonds backing them. This is because it is unlikely that all or even most of the junk bonds will default. This makes the collateralized bond obligation investment grade and therefore banks are allowed to invest in them. See also: Collateralized Loan Obligation, Collateralized Mortgage Obligation.

collateralized bond obligation

A derivative security collateralized by a pool of high-yield bonds. Several classes of these obligations are issued for a single pool of bonds with different classes offering different yields and a different degree of credit risk. Interest and principal repayments received on the bond portfolio are passed through to owners of the derivative securities. Compare collateralized mortgage obligation.
References in periodicals archive ?
Korea Credit Guarantee Fund (KODIT) will help issue Primary Collateralized Bond Obligations (P-CBO), amounting to 1 trillion won, for construction companies that pledged unsold homes as collateral for their bonds.
C-BASS) and serves as investment advisor to C-BASS-sponsored collateralized bond obligations (CBOs) and private investment funds.
For C-BASS CBO XV, the collateral will be selected and monitored by CIM, a registered investment adviser established by Credit-Based Asset Servicing and Securitization LLC (C-BASS) to act as collateral manager for its collateralized bond obligations (CBOs).
For C-BASS CBO XIV, the collateral will be selected and monitored by C-BASS Investment Management LLC (CIM), a registered investment adviser established by Credit-Based Asset Servicing and Securitization LLC (C-BASS) to act as collateral manager for its collateralized bond obligations (CBOs).
For C-BASS CBO XIII, the collateral will be selected and monitored by C-BASS Investment Management LLC (CIM), a registered investment adviser established by Credit-Based Asset Servicing and Securitization LLC (C-BASS) to act as collateral manager for its collateralized bond obligations (CBOs).
2%) securities, collateralized bond obligations (CBO; 4.
Currently, MKP manages three hedge funds and two collateralized bond obligations (CBOs) for a total in excess of $2.
Both are collateralized bond obligations (CBOs) backed predominantly by investment grade bonds.
These two transactions are both collateralized bond obligations (CBOs) backed predominantly by high yield bonds.
CDO downgrades were notably concentrated in arbitrage cash flow collateralized bond obligations, with a third of the sector's rated tranches downgraded in 2002.
The majority of downgrades this year were concentrated in the same sectors as in 2002, with arbitrage cash flow collateralized bond obligations (ACF CBOs) making up the bulk of downgrades (approximately 55%).
The insurance of 'A' and 'BBB' rated CDO and CDS tranches prior to 1999, particularly high yield collateralized bond obligations (CBOs), has resulted in a heightened level of concern on those transactions, given the current poor performance of the CDO and CDS sectors.

Full browser ?