Broad Index Synthetic Trust Offering - BISTRO

AAA

DEFINITION of 'Broad Index Synthetic Trust Offering - BISTRO'

Proprietary name used by J.P. Morgan for creating collateralized debt obligations (CDOs) from credit derivatives. The Broad Index Secured Trust Offering (BISTRO) was introduced in 1997 and was the predecessor to the synthetic collateralized debt obligation structure that become popular in the following years.

INVESTOPEDIA EXPLAINS 'Broad Index Synthetic Trust Offering - BISTRO'

A synthetic CDO utilized credit derivatives as a means of transferring credit risk in a portfolio. Synthetic CDOs may be used by banks to manage risk capital and use credit default swaps rather than asset ownership. BISTRO is believed to be one of the first synthetic CDO instruments ever created.

RELATED TERMS
  1. Collateralized Debt Obligation ...

    An investment-grade security backed by a pool of bonds, loans ...
  2. Credit Default Swap - CDS

    A swap designed to transfer the credit exposure of fixed income ...
  3. Credit Derivative

    Privately held negotiable bilateral contracts that allow users ...
  4. Credit Risk

    The risk of loss of principal or loss of a financial reward stemming ...
  5. Default Risk

    The event in which companies or individuals will be unable to ...
  6. Synthetic CDO

    A form of collateralized debt obligation (CDO) that invests in ...
Related Articles
  1. CDOs And The Mortgage Market
    Insurance

    CDOs And The Mortgage Market

  2. Investing In Securitized Products
    Insurance

    Investing In Securitized Products

  3. Collateralized Debt Obligations: From ...
    Retirement

    Collateralized Debt Obligations: From ...

  4. The Fuel That Fed The Subprime Meltdown
    Personal Finance

    The Fuel That Fed The Subprime Meltdown

comments powered by Disqus
Hot Definitions
  1. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  2. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  3. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  6. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
Trading Center