A synthetic structure that consists of a single tranche. It is simpler than a standard synthetic tranche and can be customized to an investor’s preferences. With an on-demand CDO, only one tranche of the structure, usually a mezzanine tranche, is sold to investors, while the arranger becomes the direct counterparty to the transaction since the structure involves no SPV. This allows the seller to meet investors’ needs in terms of customization and cost considerations. Unlike conventional CDOs, on-demand CDOs don’t requires that all the different classes of tranches (equity, mezzanine, senior) be sold for a transaction to complete. This instrument was introduced in 2003 a a more flexible alternative to conventional collateralized debt obligations (CDOs).

An on-demand CDO is also referred to as a bespoke tranche, a customized monotranche, a bespoke CDO, a tailor-made CDO, among others.