CLOs are special purpose vehicles (SPV). SPVs are a portfolio of diversified syndicated leveraged loans and, through them, the private placement of rated debt and equity securities. This in turn, provides investors with different risk and reward profiles. SPVs are also called special purpose entities. They are subsidiaries created by parent companies to isolate financial risk. The legal status as a parent company makes obligations secure, even if the parent company becomes insolvent or files a Chapter 7, 9, 11, or 12 bankruptcy. In the context of a CLO, the investments are much safer than stocks or bonds.