Assets
CDOs own financial assets such as corporate loans or mortgagebacked securities. A CDO is primarily identified by its underlying assets.The first CDOs, created in 1987, owned highyield bond portfolios. In fact, before the term ‘CDO’ was invented to encompass an everbroadening array of assets, the term in use was ‘collateralized bond
obligation’ or ‘CBO.’ In 1989, corporate loans and real estate loans were used in CDOs for the first time,causing the term ‘collateralized loan obligation’ or ‘CLO’ to be coined. Generally, CLOs are comprised of performing highyield loans, but a few CLOs, even as far back as 1988, targeted distressed and nonperforming loans. Some CLOs comprised of investmentgrade loans have also been issued.