CBO Instrument

From Open Risk Manual

Definition

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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This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.

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