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ARTICLE · 30 AUGUST 2023

Credit Funds: Rated Note Feeders FAQ

Ropes & Gray LLP
Ropes & Gray LLP
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It is more common for this structure to be used on closed-end funds, as the finite term and lack of redemption rights correspond well to a note with a fixed maturity.

United StatesFinance and Banking
Jason E. Kolman
Jason E. Kolman
Jessica Marlin
Jessica Marlin
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Initial and Structural Considerations:

Can a rated note feeder work on an open-ended fund?

  • It is more common for this structure to be used on closed-end funds, as the finite term and lack of redemption rights correspond well to a note with a fixed maturity.
  • However, we have seen this structure used on open-end funds, typically by hardwiring the redemption terms into the documents (i.e., insurance investors cannot make individual redemption decisions).

Can we do a standalone rated note fund instead of a feeder product?

  • Yes. A standalone product may be more expensive and take more time to establish, but it can be more easily customized to address the specific needs of insurance investors and ratings agencies.

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