What does Bespoke CDO mean?
A collateralized debt obligation created for a specific group of investors. It is a special type of collateralized debt obligation (CDO) and is structured according to the needs of investors. It differs from a regular CDO because it usually only involves a single tranche to be sold as opposed to all 3 tranches (equity, mezzanine, senior) in a regular CDO for the transaction to be completed. A bespoke CDO is a tailor made CDO to meet the investment needs of a specific group. It allows an investor to target a specific risk/return profile.
Futures Knowledge Explains Bespoke CDO
Bespoke CDO is a tailor made collateralized debt obligation to meet specific risk/return profiles of a group of investors. As it carries terms quite different from standard CDO, the Bespoke CDO is not so liquid.