Secured mortgage bonds are a separate entity used to manage debt, taking ownership of debts including mortgages. The combined mortgage pool forms the basis for investors to purchase bonds, known as tranches, with a defined set of rules. This type of finance is associated with high-priced properties and used by banks, insurance companies, hedge funds, […]
A collateralized bond obligation (CBO) is a bond backed by a pool of junk bonds, but is intended to be investment grade. The varying levels of credit quality of bond funding provide overall stability to the backstop, and the interest rates are usually credible. The risk is minimal, making it an attractive option for smaller […]
A secured debt obligation is an investment backed by multiple assets, including non-mortgage bonds or bank loans, creating higher risk but also higher returns. Collateralized debt obligations (CDOs) are investment grade securities that use a mixture of debt instruments to back a single bond. Investors do not own the debt instruments but have access to […]
