Four attributes of a CDO
Any CDO can be well described by focusing on its four important attributes: assets, liabilities, purposes,and credit structures. Like any company, a CDO has assets. With a CDO, these are financial assets, such as corporate loans or mortgagebacked
securities. And like any company, a CDO has liabilities. With a CDO,these run the gamut of preferred shares to AAA rated senior debt. Beyond the seniority and subordination
of CDO liabilities, CDOs have additional structural credit protections, which fall into the category of either cash flow or market value protections. Finally, every CDO has a purpose that it was created to fulfill, and these fall into the categories of arbitrage, balance sheet, or origination.