Collateralized Debt Obligations (CDOs) are structured fixed income securities with cash flows linked to the performance of debt instruments. The underlying collateral backing a CDO consists of one or more types of debt, including high yield bonds, emerging market and sovereign debt, and subordinated securities from structured transactions. CDOs are issued by commercial banks, insurance companies and money managers. There are basically two types of CDOs: cashflow and market value.

 

Similar to other asset-backed securities, CDOs consist of several tranches with the senior tranche having coupon and principal payment priority over the mezzanine and equity tranches.

 

PFSC partners with the issuers to provide “real time” back-up and successor servicing, treasury monitoring and obligor and collateral oversight.