what is a collateralized loan obligation clo 
a collateralized loan obligation clo is a type of security that allows investors to purchase an interest in a diversified portfolio of company loans the company selling the clo will purchase a large number of corporate loans from borrowers such as private companies and private equity firms and will then package those loans into a single clo security the clo is then sold off to investors in a variety of pieces called tranches with each tranche offering its own risk reward characteristics 