CBO Instrument. A multitranche debt structure similar in some respects to a collateralized mortgage obligation (CMO) structure. Typically low-rated bonds rather than mortgages serve as the collateral. The organization creating and promoting the structure usually holds the underlying equity and may also collect a fee.
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." For example high yield [emerging market] CBO which consists of a portfolio of different high yield [emerging market] bonds. Investopedia: Similar in structure to a collateralized mortgage obligation (CMO), but different in that CBOs represent different levels of credit risk, not different maturities. Defoinition Origin:Investopedia
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