The collateralized loan obligation, or CLO, is one of those funky creations of Wall Street wizardry that have been around for decades. Just like its close cousin, the much-castigated collateralized debt obligation, it’s a tool used to package a bunch of high-risk debt together—mortgage bonds for CDOs, corporate loans for CLOs—so they can be easily sold to investors hungry for juicy returns.
Unlike the CDO, the
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