Instrument which allows the issuer or borrower to choose between paying interest in cash, or in kind (PIK) at each interest payment date. Typically the PIK interest would come at a premium (typically anywhere between 50-100bps) to the cash interest.

See also: Payment-in-Kind (PIK) Instrument, Pay-if-you-Can (PIYC) Instrument

If you would like to learn more about the financing process, please see our Termgrid Primers – Series 1: The Debt Financing Process.