Collateralized Loan Obligation - CLO

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Dictionary Says

Definition of 'Collateralized Loan Obligation - CLO'

A special purpose vehicle (SPV) with securitization payments in the form of different tranches. Financial institutions back this security with receivables from loans.
Investopedia Says

Investopedia explains 'Collateralized Loan Obligation - CLO'

Collateralized loan obligations are the same as collateralized mortgage obligations (CMOs) except for the assets securing the obligation. CLOs allow banks to reduce regulatory capital requirements by selling large portions of their commercial loan portfolios to international markets, reducing the risks associated with lending.

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