CDO

Collateralized Debt Obligation. A pooled investment that holds diversified debt (loans, bonds, MBS, ABS) and tranches them into different risk slices. Senior tranche gets paid first; equity tranche absorbs first losses.

Famously at the heart of 2008 (subprime CDOs collapsing). Modern CLOs (collateralized loan obligations, made of leveraged loans) are healthier — different collateral, different structure, but same basic concept.