Financial Reporting Council 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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-''Financial reporting - UK''
+Debt instruments based on non-cash payment of interest coupons.
-(FRC).
+Interest is usually recognised by an increase in the amount of principal owed by the borrower.
-The regulatory body in the UK that sets, monitors and enforces accounting, auditing and actuarial standards.
-The FRC's other functions include overseeing the regulatory activities of the professional accountancy bodies regulating audit, and promoting high standards of corporate governance.
+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.
 == See also ==
-* [[Accounting standards]]
+* [[Coupon]]
-* [[Accounting Council]]
+* [[Equity]]
-* [[Audit & Assurance Council]]
+* [[Interest]]
-* [[Auditing Practices Board]]
+* [[Notes]]
-* [[Actuarial Council]]
+* [[Payment in kind]]
-* [[BEIS]]
+* [[Principal]]
-* [[Financial Reporting Review Panel]]
+* [[Secured debt]]
-* [[Professional Oversight Board]]
+* [[Subordinated debt]]
-* [[UK Corporate Governance Code]]
+* [[Unsecured debt]]
-* [[UK Stewardship Code]]
-* [[Conduct Committee]]
-[[Category:Accounting,_tax_and_regulation]]