PIK
Business & Finance abbreviation · Finance
| Stands for | Payment in kind |
|---|---|
| Categories | Business & Finance |
PIK stands for Payment in kind, a finance abbreviation.
Feature of a loan, bond or preferred stock that lets the borrower pay interest or dividends by issuing more of the security, or adding to principal, instead of paying cash. It preserves cash for the borrower but makes the debt grow over time.
Example: The holding company's notes carry 12 percent PIK interest, so the balance compounds until maturity.
Usage notes
PIK debt is common in leveraged buyouts and distressed financing and usually carries a higher rate than cash-pay debt. "PIK toggle" notes let the issuer choose each period between cash and PIK interest. Rising use of PIK in private credit portfolios is often read as a sign of borrower stress.
Related abbreviations
More finance abbreviations
- NWC – Net working capital
- OCF – Operating cash flow
- OpCo – Operating company
- OpEx – Operating expenditure
- PE – Private equity
- PI – Profitability index
- PIPE – Private investment in public equity
- PV – Present value
- QoE – Quality of earnings
- RAROC – Risk-adjusted return on capital
- RCF – Revolving credit facility
- ROA – Return on assets