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Collateralized Bond Obligation - CBO

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Dictionary Says

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 Says

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.

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