This chapter explores the utilization of payment-in-kind (PIK) instruments in the context of rising interest rates and their implications for borrowers and lenders. It discusses the evolving dynamics of private credit markets, highlighting the benefits and risks of PIK arrangements and the new concept of synthetic PIKs. The conversation provides insight into how these financial tools offer flexibility to borrowers while reshaping the landscape of debt management during challenging economic conditions.
One of the strengths of private credit is its flexibility. And who doesn’t love to PIK and choose?
In this week’s episode of Cloud 9fin, US private credit editor David Brooke asks senior reporter Shubham Saharan to add another contribution to the ever-evolving private credit glossary as they dive into the definition of synthetic PIKs. Listen in to learn about what these instruments are, how they’re being used by the industry, and whether they’re likely to become a passing trend or an emerging staple.
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