CLO
A CLO, or collateralized loan obligation, is a structured security backed by a pool of corporate loans.
A collateralized loan obligation (CLO) is a structured security backed by a pool of corporate loans, typically loans to companies with below-investment-grade credit ratings. It is issued in several tranches that differ in repayment priority and risk, and the interest and principal collected from the loans are paid out in a set order, starting with the most senior tranche.
A CLO is run by a specialist manager that can buy and sell loans within the limits set by the deal's documents. CLOs are a type of collateralized debt obligation (CDO), distinguished by the fact that their collateral consists of corporate loans.
This entry is based on AIPOST articles and widely known facts. If something is wrong, please send us a correction request.