International bond 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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+Debt instruments based on non-cash payment of interest coupons.
-Formerly (and still much more commonly) known as a Eurobond.
+Interest is usually recognised by an increase in the amount of principal owed by the borrower.
-An offshore bond in the international capital markets, issued in a [[Eurocurrency]], most frequently in USD.
-Maturities at issue are normally greater than one year.
+PIKs are generally either unsecured loans or deeply subordinated securities ranking just before equity in the capital structure.
-They are usually - but not always - in bearer form.
+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.
-They can be issued on any interest basis.
+In order to compensate lenders for the risk, PIKs have to offer significantly enhanced rates of return to investors.
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-Any bond issued outside the country of domicile of the issuer.
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-The term is also sometimes used (incorrectly) to refer to a global bond.
 == See also ==
-* [[Domestic bond]]
+* [[Coupon]]
-* [[Eurobond]]
+* [[Equity]]
-* [[Eurocurrency]]
+* [[Interest]]
-* [[Foreign bond]]
+* [[Notes]]
-* [[Global bond]]
+* [[Payment in kind]]
+* [[Principal]]
-[[Category:Technical_skills]]
+* [[Secured debt]]
+* [[Subordinated debt]]
+* [[Unsecured debt]]