The article discusses how when one company defaults on its debt, it can lead to more defaults in the future. This effect is especially important for collateralized debt obligations (CDOs). The researchers created a model that takes this default clustering into account and can connect single-name credit securities like credit default swaps to multi-name credit securities like CDOs. When they tested the model using real market data from the collapse of companies like Bear Sterns and Lehman Brothers, they found that the model worked well.