Financial Policy Committee and PIK notes: Difference between pages

Revision as of 14:21, 22 August 2017

Debt instruments based on non-cash payment of interest coupons.

Interest is usually recognised by an increase in the amount of principal owed by the borrower.

PIKs are generally either unsecured loans or deeply subordinated securities ranking just before equity in the capital structure.

This means that, in the event of a bankruptcy, PIKs are the last debts to be repaid, making them a high risk instrument for lenders and investors.

In order to compensate lenders for the risk, PIKs have to offer significantly enhanced rates of return to investors.

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-(FPC).
+Debt instruments based on non-cash payment of interest coupons.
-A committee of the Bank of England with primary responsibility for identifying, monitoring and taking action to remove or reduce systemic risks, with a view to protecting and enhancing the resilience of the UK financial system.
+Interest is usually recognised by an increase in the amount of principal owed by the borrower.
-The FPC has a secondary objective to support the economic policy of the UK Government.
+PIKs are generally either unsecured loans or deeply subordinated securities ranking just before equity in the capital structure.
-== See also==
+This means that, in the event of a bankruptcy, PIKs are the last debts to be repaid, making them a high risk instrument for lenders and investors.
-* [[Bank of England]]
-* [[Financial stability]]
-* [[Monetary Policy Committee]]
-* [[Systemic risk]]
-[[Category:Risk_frameworks]]
+In order to compensate lenders for the risk, PIKs have to offer significantly enhanced rates of return to investors.
+== See also ==
+* [[Coupon]]
+* [[Equity]]
+* [[Interest]]
+* [[Notes]]
+* [[Payment in kind]]
+* [[Principal]]
+* [[Secured debt]]
+* [[Subordinated debt]]
+* [[Unsecured debt]]