Types of CDOs
A) Based on the underlying asset:
- Collateralized loan obligations (CLOs) — CDOs backed primarily by leveraged bank loans.
- Collateralized bond obligations (CBOs) — CDOs backed primarily by leveraged fixed income securities.
- Collateralized synthetic obligations (CSOs) — CDOs backed primarily by credit derivatives.
- Structured finance CDOs (SFCDOs) — CDOs backed primarily by structured products (such as asset-backed securities and mortgage-backed securities).
Note: In 2007, 47% of CDOs were backed by structured products, such as mortgages; 45% of CDOs were backed by loans, and only less than 10% of CDOs were backed by fixed income securities.
B) Other types of CDOs include:
- Commercial Real Estate CDOs (CRE CDOs) — backed primarily by commercial real estate assets
- Collateralized bond obligations (CBOs) — CDOs backed primarily by corporate bonds
- Collateralized Insurance Obligations (CIOs) — backed by insurance or, more usually, reinsurance contracts
- CDO-Squared — CDOs backed primarily by the tranches issued by other CDOs.
- CDO^n — Generic term for CDO3 (CDO cubed) and higher, where the CDO is backed by other CDOs/CDO2/CDO3. These are particularly difficult vehicles to model because of the possible repetition of exposures in the underlying CDO.
Read more about this topic: Collateralized Debt Obligation
Famous quotes containing the words types of and/or types:
“Science is intimately integrated with the whole social structure and cultural tradition. They mutually support one other—only in certain types of society can science flourish, and conversely without a continuous and healthy development and application of science such a society cannot function properly.”
—Talcott Parsons (1902–1979)
“Our major universities are now stuck with an army of pedestrian, toadying careerists, Fifties types who wave around Sixties banners to conceal their record of ruthless, beaverlike tunneling to the top.”
—Camille Paglia (b. 1947)