Collateralized Bond Obligation - CBO


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."

BREAKING DOWN '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.

  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Collateralized Mortgage Obligation ...

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  3. Collateralized Debt Obligation ...

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

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  5. Collateralized Borrowing And Lending ...

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

    A rating that indicates that a municipal or corporate bond has ...
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