Collateralised Debt Obligations
These are a type of asset backed security
CDOs are constructed from a portfolio of fixed income assets
These assets are then divided into different tranches.
Senior, rated AAA
Mezzanine, rated AA to BB
Losses are applied in reverse order of seniority and so junior tranches offer higher coupons to compensate for the higher risk.
© 2023 Better Solutions Limited. All Rights Reserved. © 2023 Better Solutions Limited TopPrevNext