A collateralized debt obligation (CDO) is an investment-grade bond backed by a pool of variously-rated debt obligations including government and corporate bonds, loans, and even junk bonds. CDOs (or CBOs, short for collateralized bond obligations) are similar in concept and mechanism to collateralized mortgage obligations (CMOs), but differ in that CDOs constitute different types of debt and almost represent all-inclusive degrees of credit quality rather than different maturities.

Moreover, CDOs are not limited to a specific type of debt and usually exclude mortgage loans or bonds. CDOs are typically divided into tranches (or slices), each with a specific maturity and risk characteristics.