Chapter 17: Collateralized Debt Obligations (CDOs)

In this section

• CDO Types: CLOs, CBOs, and Synthetic CDOs
  A comprehensive look at Collateralized Debt Obligation structures, covering CLOs, CBOs, and Synthetic CDOs, with practical insights on risk distribution, credit enhancement, and real-world examples.
• Equity, Mezzanine, and Senior Tranches
  A comprehensive explanation of how CDO tranches are structured, focusing on equity, mezzanine, and senior classes, their distinct risk-return profiles, and key mechanics such as subordination and coverage tests.
• Manager’s Role and Collateral Selection
  Explore the crucial responsibilities of the collateral manager in CDOs, focusing on asset selection, performance monitoring, and coverage tests, as well as best practices and exam tips.
• Practice Vignette: Evaluating CDO Credit Structure
  Explore a real-world scenario of evaluating CDO credit structures, focusing on overcollateralization and interest coverage ratios, tranche priority, reinvestment risks, and correlation considerations.