A corner of the $850 billion private credit market is signaling pain may be on the way as lenders increasingly allow companies to make a risky type of loan amendment.
Business development companies, publicly traded firms that lend to smaller corporations, are tweaking their credit agreements to allow their borrowers to defer interest payments. Known as turning the loans into “payment-in-kind” obligations, the change can help borrowers conserve cash in the near term, while boosting their debt loads in the process.
