Funding 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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-#Medium to longer term borrowing by an undertaking to meet its operational needs.
+Debt instruments based on non-cash payment of interest coupons.
-#The provision in advance for future liabilities in a defined benefit pension scheme by the accumulation of assets.
-#More generally, the provision or the sources of finance necessary for the continuing operation of an undertaking. In this context, sources of finance include creditors, bank lenders, bondholders and shareholders.
-== See also ==
+Interest is usually recognised by an increase in the amount of principal owed by the borrower.
-* [[Defined benefit pension scheme]]
-* [[FFL]]
+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.
-==External links==
+== See also ==
-[http://www.gtnews.com/Features/PDF/AFP_Guide_to_Global_Short_Term_Borrowing.pdf AFP Guide to Global Short Term Borrowing]  ''gtnews.com''
+* [[Coupon]]
+* [[Equity]]
+* [[Interest]]
+* [[Notes]]
+* [[Payment in kind]]
+* [[Principal]]
+* [[Secured debt]]
+* [[Subordinated debt]]
+* [[Unsecured debt]]