Financial product backed by tranches from other CDOs
CDO-Squared is a
collateralized debt obligation backed primarily by the tranches issued by other CDOs.[1] These instruments became popular before the
financial crisis of 2007–08. There were 36 CDO-Squared deals made in 2005, 48 in 2006 and 41 in 2007.
Merrill Lynch was a big producer, creating and selling 11 of them.[2]
The collapse of the market for collateralized debt obligations and CDO-Squared contributed to the 2008
subprime mortgage crisis.[3]Goldman Sachs
appears to be the last bank to hold CDOs-Squared, holding $50 million (~$59.8 million in 2023) in June 2018.[4]