Reported about 2 months ago
Amid rising financial stress, the use of Payment-in-Kind (PIK) debt in corporate filings has surged, raising alarms among ratings agencies and investors. PIK allows companies to defer interest payments, often leading to hidden leverage that complicates future debt refinancing. While this approach may provide temporary relief during cash flow challenges, experts warn it could mask underlying liquidity issues and create unsustainable debt levels, particularly affecting private equity firms grappling with higher borrowing costs and lower valuations.
Source: YAHOO