Page 33 - PRIAA Glossary

COLLATERALISED DEBT OBLIGATION (CDO)
A structured financial product that pools various cash flow generating assets (such as mortgages, bonds and loans) together and creates risk-based tranches that can be sold to investors. The risk of a tranche is determined by attachment and detachment points. Riskier tranches (junior tranches) earn higher premiums to compensate for higher risks. Senior tranches are less risky and offer lower coupons.
COLLATERALISED DEBT OBLIGATION SQUARED (CDO2)
A collateralised debt obligation (CDO) structure where the underlying portfolio is made up of CDOs or tranches of CDOs.
COLLATERALISED LOAN OBLIGATION (CLO)
The securities issued by a special purpose vehicle (SPV) where the cash flows payable under such securities are generated from the receivables on a portfolio of business loans. The securities are typically structured in a variety
of tranches and categorised by their risk profiles. CLOs allow financial institutions to reduce regulatory capital requirements by selling portions of their commercial loan portfolios to a different class of investors, reducing the risks associated with lending.
COMBINED CYCLE GAS TURBINE (CCGT)
An energy-efficient gas powered system where gas combustion drives a gas turbine. The exhaust gases pass through a boiler generating steam that drives a second turbine.
COMBINED HEAT AND POWER (CHP)
The production of two forms of energy, such as high- temperature heat and electricity, from the same process. For example, the steam produced from boiling water could be used for industrial heating. In the United States, the term typically used for this process is co-generation.
COMMERCIAL MORTGAGE BACKED SECURITY (CMBS)
A type of bond or note issued by a special purpose vehicle (SPV), where the bond or note is backed by an underlying pool of commercial mortgages. The principal and interest generated by the underlying pool of assets effectively service the principal and interest obligations of the bonds or notes.
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