CDOs — collateralized debt obligations — helped trigger the 2008 housing crisis. Now CLOs are on the rise. Should we be worried?
CDOs — collateralized debt obligations — helped trigger the 2008 housing crisis. Now CLOs are on the rise. Should we be worried?
In the wake of the financial crisis, we all learned a lot of fear-inducing acronyms, like CDOs – collateralized debt obligations – which helped trigger the housing meltdown. So news that volumes of a similar sounding investment – CLO or collateralized loan obligations – had hit $247 billion in first nine months of this year, according to the Wall Street Journal, may not be welcome to many. But while these are similarly structured to their infamous counterparts, CLOs are said to be less risky.
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