Collateralized Bond Obligation - CBO

AAA

DEFINITION of '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 EXPLAINS 'Collateralized Bond Obligation - CBO'

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
  1. Collateralized Mortgage Obligation ...

    A type of mortgage-backed security in which principal repayments ...
  2. Collateralized Debt Obligation ...

    An investment-grade security backed by a pool of bonds, loans ...
  3. Bespoke CDO

    A type of collateralized debt obligation (CDO) that a dealer ...
  4. Collateralized Borrowing And Lending ...

    A money market instrument that represents an obligation between ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has ...
  6. Junk Bond

    A colloquial term for a high-yield or non-investment grade bond. ...
Related Articles
  1. Junk bonds differ because of their issuers' credit quality.
    Bonds & Fixed Income

    Junk Bonds: Everything You Need To Know

  2. Investing

    What is the difference between a collateralized ...

  3. Retirement

    Bond Basics Tutorial

  4. Bonds & Fixed Income

    How long will it take for a bond to ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center