Private equity (PE) collateralized fund obligations (CFOs) rated by Fitch Ratings have exhibited stable performance since recovering from the coronavirus-driven economic downturn and market volatility, with cash flows and loan-to-value ratio (LTV) measures returning to pre-pandemic levels or better. Driving this performance are significantly improved market conditions and the transactions’ structural features, such as de-leveraging mechanisms. Transaction-specific charts and tables on pages 4-6 provide additional details.One PE CFO was issued in 2021 (Astrea VI, in March 2021), a figure similar to 2020. Uncertainty caused by regulatory proposals as well as the pandemic-driven market volatility have hampered issuance in both years. As the pandemic recedes and regulators provide additional clarity, the market may rebound in 2022. Fitch expects that PE CFO ratings will remain stable in 2022, while some tranches could be upgraded if they continue deleveraging. Transactions’ performance will be driven by expected global economic growth. Fitch expects active capital markets and PE funds’ exit activity to generate consistent cash flows and support liquidity for Fitch-rated PE CFOs, although a market dislocation could pause this trend.

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