What is Collateralized Debt Obligation Squared – CDO-Squared?
A special purpose vehicle (SPV) with securitization payments in the form of tranches. A collateralized debt obligation squared (CDO-squared) is backed by a pool of collateralized debt obligation (CDO) tranches. Read more for examples and further explanation including related video clips and also comments
Example explains Collateralized Debt Obligation Squared – CDO-Squared
This is identical to a CDO except for the assets securing the obligation. Unlike the CDO, which is backed by a pool of bonds, loans and other credit instruments; CDO-squared arrangements are backed by CDO tranches. CDO-squared allows the banks to resell the credit risk that they have taken in CDOs.
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