More private credit firms now accept higher-risk ‘payment in kind’ in direct-lending deals

Partners Thomas Kim and Kaveeta Sandhu shared some thoughts with the The Business Times on:

• Variations of PIK emerging in Asia

• Factors behind private credit’s expansion beyond special situations and mezzanine debt

• Why banks are also looking to raise private-credit funds for direct lending

Driven by higher-for-longer interest rates, regulatory capital requirements for banks, and the lack of a robust public-debt market in the region, PIK is increasingly adopted in private credit and even senior financings. This marks a shift in the private-credit space, as PIK has previously been typically associated with distressed and mezzanine financing.