What is a Collateralized Mortgage Obligation?

Debt-backed bonds are a type of credit derivative. It is an emerging investment portfolio based on one or more categories and decentralized mortgage debt credits to re-divide investment returns and risks to meet the needs of investors with different risk preferences.

Debt mortgage bond

The basic structure of a CDO product is as follows: The core of the CDO, the special purpose carrier SPV , can be regarded as an independent company established for CDO product transactions: it purchases

The earliest CDO was issued by Drexel Burnham Lambert I in 1987. Ten years later, CDO has become one of the rapidly developing asset securities. CDO's rapid growth is receiving the favor of many financial managers, fund managers, insurance companies, investment banks, and retirement funds. The most important thing is that David X. Li introduced Gaussian copula models in 2001, which provides a fast pricing method for CDOs so that CDOs can be widely distributed in the market. According to the Securities Industry and Financial Markets Association, CDOs issued a total of $ 157 billion in 2004, 272 billion in 2005, 552 billion in 2006, and 503 billion in 2007.