Wednesday, November 18, 2009

Glossary - CBLO/CBO/CDO/CMO

What Does Collateralized Borrowing And Lending Obligation - CBLO Mean?
A money market instrument that represents an obligation between a borrower and a lender as to the terms and conditions of the loan. Collateralized borrowing and lending obligations (CBLOs) are used by those who have been phased out of or heavily restricted in the interbank call money market. Collateralized Borrowing and Lending Obligation (CBLO)", a money market instrument as approved by RBI, is for the benefit of the entities who have either been phased out from inter bank call money market or have been given restricted participation in terms of ceiling on call borrowing and lending transactions and who do not have access to the call money market. CBLO is a discounted instrument available in electronic book entry form for the maturity period ranging from one day to ninety Days.

What Does Collateralized Bond Obligation - CBO Mean?

An investment-grade bond backed by a pool of junk bonds. Junk bonds are typically not investment grade, but because they pool several types of credit quality bonds together, they offer enough diversification to be "investment grade."

What Does Collateralized Debt Obligation - CDO Mean?

An investment-grade security backed by a pool of bonds, loans and other assets. CDOs do not specialize in one type of debt but are often non-mortgage loans or bonds.

What Does Collateralized Mortgage Obligation - CMO Mean?

A type of mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities, called trenches. The repayments from the pool of pass-through securities are used to retire the bonds in the order specified by the bonds' prospectus.

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