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The Funding Process |
As required by congressional statute, OPIC’s position in the capital structure of private equity funds is in the form of a senior secured loan. OPIC issues certificates of participation (COPs) in the U.S. debt capital markets, the proceeds of which are provided as a loan to the private equity fund. The COPs are guaranteed by the full faith and credit of the U.S. government. The base interest on each COP, which is dependent on duration (determined by the fund manager), generally is comprised of the appropriate U.S. Treasury STRIP yield plus a variable spread as determined on each transaction in the U.S. debt capital markets at the time of COP issuance. The base interest is paid to the COPs investors, not OPIC.
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