# Pay-in-kind bond and (imprecise) substitute performance bond (pay-in-kind bond, PIK bond)

- Canonical URL: https://www.gerhardmerk.de/pay-in-kind-bond-and-imprecise-substitute-performance-bond-pay-in-kind-bond-pik-bond
- Post ID: 591339
- Modified: 2023-07-25T21:14:09+00:00
- Language: en

## Definition

The issuer of the bond has the contractual option to - either pay the obligations arising from the issue (interest payments, redemption) in cash, or - service them by issuing new bonds, and - thus postpone its payment obligations (pay-in-kind or payment-in-kind securities involve investors receiving more bonds in place of cash interest, valued at par value). - Such bonds are often used in leveraged buy-outs (those bonds are issued to help fund the big leveraged buy-outs). In times of tensions in the financial market, such as in the wake of the subprime crisis, experience shows that the proportion of such bonds of various maturities increases sharply. - See payment-in-kind loan, Toogle debt instruments. - Cf. Deutsche Bundesbank Monthly Report, April 2007, p. 21. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

- Generator: Merk Knowledge 1.1.1