Collateralized loan obligation. A form of CDO backed by corporate loans. A CLO issuer is a special purpose vehicle (SPV) with securitization payments in the form of different tranches. Financial institutions back this security with receivables from a portfolio of loan obligations. Collateralized loan obligations are the same as collateralized mortgage obligations (CMOs), except for the assets securing the obligation. Banks have historically used CLOs to reduce regulatory capital requirements by selling large portions of their commercial loan portfolios through a CLO structure.