Cdo-cubed

Given the number of CDO Squared transactions in the marketplace, and the continued narrowing of corporate spreads, the emergence of CDO Cubed could be regarded as almost inevitable.

Source: wiktionary

But what if you can't sell all the bottom tranches of the CDO-squared securities? You guessed it. You form another pool of those untouchables—called a CDO cubed—and tranche away again.

Source: wiktionary

A CDO squared is a CDO that only uses other CDOs as collateral. The CDO cubed is a special purpose vehicle with securitization payments in the form of tranches. A CDO cubed is backed by CDO squared tranches, allowing the banks to resell the credit risk they had taken once again by repackaging their CDO-squared.

Source: wiktionary