Growing Risks From Payment-in-Kind Debt Draw Watchdog Scrutiny 

The International Monetary Fund is planning a deep dive on the growing prevalence of payment-in-kind debt that allows companies to defer interest payments, amid wider fears the tool could undermine financial stability by obscuring stress.

The watchdog plans to look at how often the expensive debt used to keep struggling companies alive is in fact merely delaying an inevitable insolvency, according to a person with knowledge of the matter. The IMF also plans to look at interconnections between banks and private credit after a series of lending partnerships were announced this year, the person added, asking not to be identified as they weren’t authorized to speak publicly.