Collateralized Debt Funding

**Collateralized Debt Funding**

Collateralized Debt Funding refers to the practice of securing loans or funding by pledging specific assets or collateral to the lender. This type of funding reduces the lender’s risk, as the collateral can be claimed if the borrower defaults. Common forms include collateralized debt obligations (CDOs), mortgage-backed securities (MBS), and other asset-backed securities. It plays a significant role in corporate finance, lending, and investment strategies, enabling borrowers to access capital at potentially lower interest rates while providing lenders with added security.