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Global Financial Markets Institute»Collateralized Debt Obligations

Collateralized Debt Obligations

Collateralized Debt Obligations (CDOs) may be subdivided into two categories, CollateralizedBond Obligations (CBOs) and Collateralized Loan Obligations (CLOs). In each case the underlying assets dictate the name of the security. Similar to other securitized products, the assets are pooled and a new security is issued which is backed by the underlying securities or loans. During the crisis some CBOs were backed by sub-prime mortgages resulting in investor losses. The Volcker Rule doesn’t allow banks to buy covered funds which in this case means CDOs backed by bonds are not eligible to be purchased by banks. CLOs have a distinct advantage going forward. CLOs are often grouped as CLO 1.0, CLO 2.0 and with the Volcker rule, some are calling newly issued CLOs, post Volcker rule, CLO 3.0. The key to understanding valuation is to understand the credit of the underlying assets, how the security is structured and the default assumptions used.

Course Objectives

By the end of the course, participants will be able to:

  • Explain the basic asset securitization structure
  • Describe the basic structures of CBOs and CLOs
  • Discuss the features and characteristics of these products
  • Explain the basics of pricing
  • Identify the differences between funded vs. unfunded structures

Suggested Prerequisites:

  • Fundamentals of the Capital Markets / Securities Industry
  • Fixed Income or equivalent knowledge

Program Level:Foundational

Advance Preparation: None

Computers and Financial Calculators: N/A

Recommended CPE Credits: 7

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  • About Us
    ▼
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    • Our Associations
  • Services
    ▼
    • Training Needs Analysis
    • Custom Built Training
    • Subject Matter Experts
  • Training Courses
    ▼
    • Alternative Investments
    • Asset Liability Management
    • Capital Markets
    • Commodities
    • Corporate Finance Course
    • Credit and Credit Analysis Course
    • Credit Derivatives
    • Derivatives
    • Digital Assets
    • Economics
    • Equities
    • Financial Statement Analysis Accounting
    • Fixed Income Courses
    • Foreign Exchange
    • Insurance
    • Municipals
    • Mutual Funds and ETFs
    • Operations
    • Portfolio Management
    • Quantitative Methods and Excel
    • Regulation and Compliance
    • Risk Management
    • Securities Lending — Repurchase Agreements
    • Securitization and Structured Finance
    • Structured Products
    • Wealth Management
  • Training Methods
    ▼
    • Classroom Training
    • Virtual Instructor-Led Training (VILT)
    • Online Learning — eLearning
    • Financial Simulation
    • Blended Learning
  • Insights
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    • eNews
    • Articles
    • Glossary
    • Blog
    • Case Studies
  • Contact us
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