A collateralized loan obligation (CLO) is a securitization product created to acquire and manage a pool of leveraged loans. CLOs issue multiple debt tranches along with equity and use the proceeds from the issuance to obtain a diverse pool of syndicated bank loans.

A collateralized loan obligation (CLO) is a single security backed by a pool of debt. The process of pooling assets into a marketable security is called securitization.

The CLO manager raises capital from investors. The investors choose a tranche that meets their risk and return expectations. The CLO manager uses the capital collected from investors to purchase loans. The interest generated from the loans is used to pay investors, starting at the top tranche.

A collateralized debt obligation (CDO) is a complex structured finance product that is backed by a pool of loans and other assets and sold to institutional investors.