Operating lease and PIK notes: Difference between pages
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imported>Doug Williamson (Update for change in lease accounting regime.) |
imported>Doug Williamson (Link with Unsecured debt.) |
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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. | |||
== See also == | == See also == | ||
* [[ | * [[Coupon]] | ||
* [[ | * [[Equity]] | ||
* [[ | * [[Interest]] | ||
* [[ | * [[Notes]] | ||
* [[ | * [[Payment in kind]] | ||
* [[ | * [[Principal]] | ||
* [[ | * [[Secured debt]] | ||
* [[Subordinated debt]] | |||
[[ | * [[Unsecured debt]] | ||
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.
