It stands for levered interest only; an interest-only tranche (IO tranche) whose cashflows are “stripped” from the excess interest derived from senior and subordinate classes of the securitized structure (e.g., a CMBS  structure). Since it comes with high priority as to cashflows receipt, it is typically “top rated”- AAA-rated. However, it has greater exposure to defaults on underlying collateral defaults than the planned amortization class interest only (PAC IO).

It is also referred to as a companion IO as its yield profile has more exposure to defaults in the underlying collateral pool.