"“Payment in kind” lets borrowers make some or all of their loan interest payments by increasing the principal amount rather than using cash. In a synthetic PIK, lenders provide a company two separate pieces of debt: the main loan the company planned to borrow in the first place, plus a smaller delayed-draw term loan that sits at the same level in the capital structure and has similar terms. When interest on the first loan needs to be paid, the company taps the delayed-draw term loan. This allows the company to pay the interest in cash, but it’s technically doing so through adding more debt to its balance sheet. " https://lnkd.in/e-WA8DAn
Jorge Cerna Moran, CFA’s Post
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