Kalotay |
BondOAS™: Specifying Pay-In-Kind
(PIK) Bonds |
Example 1: Pays 10% cash coupon, and 2.5% PIK in every period.
The bond has to be set up with a 10% coupon as for regular bonds. Then:
Example
2: Pays 10%
cash coupon, and 2.5% PIK starting at, say, 10/1/2018
The bond has to be set up with a 10% coupon as for regular bonds. Then:
Example
3: Pays 10%
cash coupon until 10/1/2018; then pays 6% cash and 4% PIK
The bond has to be set up
with a 0% coupon as for regular bonds. Then:
Example
4: Pays 5%
cash and 10% PIK until 10/1/2018, then pays 9% cash and 3% PIK
The bond has to be set up
with a 0% coupon as for regular bonds. Then:
Example 5: Pays 10% cash coupon when in cash mode; 12% when in PIK mode
When in all-cash mode, bond is regular with coupon of 10 (don’t set PIK)
When in
all-PIK mode, set bond coupon to 10%. Then:
When
user wants to mix and match cash mode and PIK mode, e.g., pays all cash except
on 10/1/2018 and 10/1/2021, when bond is in PIK mode. Set bond coupon to 10%.
Then: