KBRA releases research taking a closer look at how rated note feeders (RNF) and collateralized fund obligations (CFO) have gained significant momentum in 2025, already breaking all other issuance records. The growth reflects strong adoption by investors as effective and customizable means to access alternative assets and for alternative asset managers as viable fundraising tools.

This report highlights the key trends shaping both structures, their rating stability despite credit cycle concerns, and our expectations for the remainder of 2025.

Key Takeaways

• No KBRA-rated RNF or CFO downgrades have occurred in 2025. Rather, KBRA has upgraded six tranches collectively as rated funds begin to mature, exit their investment period, and de-lever in accordance with their respective amortization schedules.
• We are monitoring how broader market dynamics are affecting the asset quality, cash flow, and liquidity of rated transactions. Competition for new DL opportunities has compressed spreads and loosened underwriting terms, which could adversely affect RNFs if excess spreads are reduced, default rates increase, or recoveries are compromised. At the same time, mergers and acquisitions activity has remained constrained by valuation gaps between buyers and sellers, market uncertainty, and elevated base rates, potentially causing CFO cash flows to come under stress if capital calls continue and distributions do not accelerate.
• By September, KBRA-rated DL feeders and CFOs had already set all-time issuance records, totaling $9 billion and $16 billion, respectively—surpassing the volume of every prior full year. These records were driven by the largest fund investment vehicle KBRA has rated to date, an increase in new and repeat issuers, and a broadening of investor diversity, master fund structures, target investment regions, and collateral types.
• While CFO structures have remained relatively consistent recently, RNFs have increasingly been issued with three or more tranches over the last 12 months (LTM) ended June 30, 2025. We expect this trend to accelerate as more equity is substituted with additional rated debt tranches. We also assigned ratings to multiple deals with four tranches during 2025, marking our first fund investment transactions with this structure, demonstrating KBRA’s ability to utilize the full spectrum of the ratings table.

For a more detailed breakdown, see our prior RNF and CFO research.

Click here to view the report.

Recent Publications

• Private Credit: CFO Growth and Performance
• Private Credit: Feeder Fund Rated Notes—Squaring the Circle
• Private Credit: Feeder Notes and Credit Facilities Remain Resilient
• Private Credit: KBRA-Rated Private Equity and Private Credit Firms Demonstrate Resilience Through Market Challenges
• Private Credit: Q2 2025 Middle Market Borrower Surveillance Compendium—Waiting for Godot

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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