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 a tranche-only 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, tranche-only 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).

A tranche-only CDO is also known as a tailor-made CDO, a bespoke tranche, a customized monotranche, a bespoke CDO , an on-demand CDO, a single-tranche CDO, or for short as an STCDO.