Collateralized Bond Obligation - CBO
An investment-grade bond backed by a pool of junk bonds. Junk bonds are typically not investment grade, but because they pool several types of credit quality bonds together, they offer enough diversification to be "investment grade."
Investopedia Commentary
Similar in structure to a collateralized mortgage obligation (CMO), but different in that CBOs represent different levels of credit risk, not different maturities.
Related Links
Junk Bonds: Everything You Need to Know
Bond Basics Tutorial
See also: Bond, Collateralized Debt Obligation - CDO, Collateralized Mortgage Obligation - CMO, Investment Grade, Junk Bond, Structured Finance, Synthetic Collateralized Debt Obligation
Also spelled: CBO
collateralized bond obligation