Amortisation refers to the process of paying down the principal balance of a loan through regular, scheduled instalments over a defined period. An amortisation period of 36 months, for example, means the borrower repays the full principal across 36 equal (or structured) monthly payments, reducing the outstanding balance to zero by maturity.
Not all private market debt instruments are fully amortising — some are 'bullet' or 'balloon' structures where interest is paid periodically but the full principal is repaid in a single lump sum at maturity. Partially amortising structures reduce principal over time but require a final balloon payment. Understanding the amortisation schedule is important for assessing a borrower's cash flow requirements and refinancing risk.