Despite the Federal Reserve apparently nearing the end of its rate-hiking phase, borrowers likely haven’t yet felt the full impact of rapidly rising interest rates.
The following report discusses that impact and outlines flexible payment-in-kind (PIK) options borrowers might want to explore.
Those options include:
- Converting a portion of senior debt interest to PIK
- Junior capital facilities that feature the ability to toggle between cash pay and PIK
- HoldCo PIK notes
- Preferred equity structures that may include a PIK dividend and equity upside for the investor
