Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

COLLATERALIZED BOND OBLIGATION (CBO) Definition & Legal Meaning

Definition & Citations:

Mechanism for converting junk grade bonds into an investment grade asset based securities (ABS). Debt financing. In this process a bank’s portfolio of low-rated bonds, as the underlying collateral for an issue of CBO, is transferred to a specially created corporation or trust, called a special purpose vehicle or CPV. The corp or trust has no other assets and manages the transferred items. Typically, thebe is managed at two or more levels, called tiers or tranches, with a variety of rates of interest and degrees of risk.

Disclaimer

This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.