Collateralized loan obligation

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Collateralized loan obligation (CLO)

A security backed by a pool of commercial or personal loans , structured so that there are several classes of bondholders with varying maturities, called tranches. Similar in structure to Collateralized Mortgage Obligations.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Collateralized Loan Obligation

An asset-backed security backed by the receivables on loans. Banks package and sell their receivables on loans to investors in order to reduce the risk coming from loan defaults. Returns on CLOs are paid in tranches; that is, the individual loans backing a CLO have different maturities, and investors are paid out as each matures. Banks offer higher interest rates to investors willing to buy CLOs backed by higher-risk loans. From a bank's perspective, in addition to reducing risk, CLOs also reduce their capital requirements by raising funds through the issue of CLOs. See also: Collateralized mortgage obligation.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Medalist Partners announced that it has acquired a majority stake in JMP Credit Advisors, a U.S.-based investment manager with expertise in managing collateralized loan obligations, from a subsidiary of JMP Group, which will remain as a minority investor in JMP Credit Advisors and an investor in the CLOs that JMP Credit Advisors manages.
Securities & Exchange Commission Chairman Jay Clayton has expressed concern about the level of corporate debt and its packaging into collateralized loan obligations (CLOs).
"At Investcorp, we're focusing on strategies, such as senior secured loans and collateralized loan obligations, that may help deliver value to investors seeking to protect themselves from the impact that rising rates could have on more traditional fixed income assets," he stated.
Securities and Exchange Commission, affirmed 19 tranches from 10 collateralized loan obligations (CLOs).
Ellington Financial LLC is a specialty finance company that invests in a diverse array of financial assets, including residential and commercial mortgage-backed securities, residential and commercial mortgage loans, consumer loans and asset-backed securities backed by consumer loans, collateralized loan obligations, corporate equity and debt securities (including distressed debt), non-mortgage and mortgage-related derivatives, equity investments in mortgage-related entities, and other strategic investments.
Summary: "Moody's Global Approach to Rating Collateralized Loan Obligations"
Meanwhile, the government will issue 3 trillion won worth of primary collateralized bond obligations (P-CBO) and collateralized loan obligations (CLO) to help small-sized construction companies avoid temporary financial distress.
Most recently, he was with GSC Group, a hedge fund specialising in distressed debt and collateralized loan obligations.
Many institutional investors--prime funds, collateralized loan obligations (CLOs), hedge funds, etc.--have never managed portfolios of loans through a credit cycle trough, and the jury is out as to how they will act when credit tightens.
Supervisory guidance is provided on the risk-based capital treatment for credit derivatives that are used to synthetically replicate collateralized loan obligations (CLOs).
In this climate, weakness in loan mutual funds and ETFs has been apparent, while demand from collateralized loan obligations (CLOs) for leveraged loan paper has been shrinking.

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