Kalotay
Analytics
A Division of Andrew Kalotay Associates, Inc.

BondOAS™: Specifying Pay-In-Kind (PIK) Bonds

Fixed Cash Coupon and PIK Rate

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:

 

 

Toggle PIKs

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: