Collateralized Bond Obligation (CBO)
An investment-grade bond backed by a pool of junk bonds. Junk bonds are typically not investment grade, but because they pool several types of credit quality bonds together, they offer enough diversification to be "investment grade." Investopedia Says:
Similar in structure to a collateralized mortgage obligation (CMO), but different in that CBOs represent different levels of credit risk, not different maturities. Related Terms:
Asset-Backed Commercial Paper
Bond
Collateralized Debt Obligation - CDO
Collateralized Mortgage Obligation - CMO
Investment Grade
Junk Bond
Structured Finance
Synthetic Collateralized Debt Obligation |