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PIK Notes

PIK notes are bonds that allow the issuer to pay interest through additional debt (in kind) rather than cash if they are unable to make cash payments. They are issued by companies undergoing financial difficulties or with long-term projects. Investors are generally funds, hedge funds, and insurance companies. To be centralized on Euronext Securities Milan, PIK bonds must be blocked on a participant's account and subject to Italian tax law. Since beginning this service, Euronext has centralized 48 issuances of PIK notes with a total nominal value of €4.72 billion.

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30 views

PIK Notes

PIK notes are bonds that allow the issuer to pay interest through additional debt (in kind) rather than cash if they are unable to make cash payments. They are issued by companies undergoing financial difficulties or with long-term projects. Investors are generally funds, hedge funds, and insurance companies. To be centralized on Euronext Securities Milan, PIK bonds must be blocked on a participant's account and subject to Italian tax law. Since beginning this service, Euronext has centralized 48 issuances of PIK notes with a total nominal value of €4.72 billion.

Uploaded by

David Cartella
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PIK Notes

Issuance and main features


January 2022
PIK Notes
Main features

What are PIK bonds?

Bonds with a PIK option (“Payment in Kind”), or PIYC (“Pay if you can”), are financial instruments
which, at given conditions, allow the issuer not to pay the coupon by cash but to exercise the option to
capitalise interests, to be accrued and paid in a future coupon or in the final redemption.

Who are the issuers?

Issuers are companies, with important and long-term projects or that are going through financial
difficulties, which issue bonds with a low or no rating but which offer higher interests compared
to the market conditions.

Who are investors?


Investors are generally funds, hedge funds and insurances companies
PIK Notes
Main features

Prerequisites to centralise PIK


Why Issuers have chosen Euronext
bonds in Euronext Securities Milan
Securities Milan?
• Bonds at the issue date are blocked on the
Euronext Securities Milan participant’s • Starting from 2017 Euronext Securities
Milan has been able to offer an operational
account model to issuers to manage the PIK option
functionality
• Bonds are subject to tax system 239/96:
transfers are only allowed between
How many Assets have we centralised
qualified investors
since the beginning of the service:
• Transfers after issuance, which are very
rare, are subject to a procedure which 48 €4,72bn
requires Euronext Securities Milan’s Number of Nominal Value
intervention issuance
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