Fundraisers should take notice: private equity collateralised fund obligations, or CFOs, are staging a quiet comeback.
CFOs tap the fixed income markets by issuing bonds that are secured against the cash flows coming out of private equity limited partnership interests. Because these cash flows are volatile and unpredictable relative to other asset classes, persuading investors to buy these securities is no mean feat, especially if the underlying collateral is a blind pool of assets to be acquired by the CFO manager after the CFO is done.
