The Relentless Rise of PIK Hints at Trouble to Come for Private Markets
- PIK allows companies to defer interest payments on their debt
- Leverage on companies with PIK debt can be harder to tabulate
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A three letter acronym is increasingly cropping up in corporate filings and it’s fueling concern among ratings companies and fund managers.
Mentions of PIK in company filings, presentations and transcripts have doubled since the start of the pandemic, according to data compiled by Bloomberg. Short for ‘payment in kind,’ the term refers to debt that allows companies the option of deferring interest payments.