Payment-in-Kind (PIK) is a feature that allows borrowers to defer cash interest payments until maturity. While PIK is not a new concept, this interest payment deferral strategy has drawn recent attention as higher base rates have persisted. In this environment, it is important for investors to carefully assess how loans are structured and how companies approach servicing debt. While PIK offers the allure of increased yields for investors, concealed risks can outweigh potential rewards.
Watch the video to understand why PIK usage demands careful scrutiny.
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