CLO is backed by corporate while CDO is backed by mortgage. So when there is a recovering and spread narrow how are CLO more sensitive to it than CDO? Corporate loan are long term so are mortgage loan?
Most likely, but not necessarily.
Never.
Hi Magician, I was mainly referring to this link(CLO vs CDO | What are they? Differences, Banking Crisis | eFM) which states what I have wriiten. Could you discuss which one is more sensitive to spreads and why as I couldn’t find explanation in the web as I believe both are long term in nature based on whatever article I hae read?
You’re better off referring to the curriculum.
What does it say backs CLOs and CDOs?
CLO is backed by syndicated bank loan and CDO have underlying pools of assets