Synthetic CDO (Synthetic Collateralized Debt Obligation). In contrast, synthetic CDOs employ non-cash assets as their underlying assets. These non-cash assets primarily consist of financial derivatives, such as credit default swaps (CDS), options, and various contractual agreements.

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. A CDO is a particular type of derivative because, as its name implies, its value is derived from another underlying asset.

A collateralized mortgage obligation (CMO) refers to a type of mortgage-backed security that contains a pool of mortgages bundled together and sold as an investment. Organized by maturity and level of risk, CMOs receive cash flows as borrowers repay the mortgages that act as collateral on these securities.

Key Takeaways. A collateralized loan obligation (CLO) is a single security backed by a pool of debt. CLOs are often corporate loans with low credit ratings or loans taken out by private equity firms to conduct leveraged buyouts.