Securitisation glossary by Vinod Kothari
Collateralized Obligation - Is the generic term for a structure that integrates cashflows from the underlying collateral to be differentiated into several distinct cashflows streams, or different securities, each having different repayment and seniority structure. Some of these securities may experience greater stability whereas others may absorb more of the risky characteristics of the underlying assets. The purpose of the reconfiguration of the cashflows from underlying assets is to either carve out securities of different maturities, or to allow some to be subordinated to the others so as to improve the rating of the latter. Specific categories of these structures are Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations.
Back to securitisation glossary