HomeDefinitionsCompareDebt Companion bondsThe financial definition for Companion bonds:A class of a Collateralized Mortgage Obligation (CMO) whose principal is paid off first when the underlying mortgages are prepaid due to falling interest rates. When interest rates rise, there will be lower prepayments of the principal; companion bonds therefore absorb most of the prepayment risk of a CMO. Click to compare definitions of Companion bonds Click to view definitions beginning co |