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Collateralized obligation

• Is the generic term for a structure that carves up the initial cash flow from a similar set of assets into a new and often unique arrangement. By dividing and redistributing the cash flows, both principal and interest, the structure alters the disbursement of the underlying collateral cash flows into several securities. Some of these securities may experience greater stability whereas others may absorb more of the risky characteristics of the underlying assets. Under various circumstances, these structures can improve the credit rating of some of the deal's components. Specific categories of these structures are Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations.

 
 Embedded terms in definition
 Assets
Bond
Cash flow
Cash
Collateralized loan obligation
Collateralized mortgage obligations
Collateralized mortgage obligation
Collateral
Credit
Generic
Interest
Mortgage
Principal
Rating
Securities
Underlying asset
Underlying
 
 Related Terms
 Accumulated benefit obligation
Collateralized loan obligation
Collateralized mortgage obligation
Collateralized mortgage obligations
General obligation bond
Limited tax general obligation bond
Projected benefit obligation

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