PE Bonds are asset-backed securities, or bonds, backed by cash flows from private equity funds (“PE funds”).

Like any other bond, an investor owns a debt instrument. An investor pays a principal amount at the start of the investment and typically receive semi-annual interests until maturity, when the principal is repaid.

However, PE Bonds are unique in several ways, especially in the asset base from which cash is generated to service the bond obligations and how the cash is distributed.