Alarm bells sound over payment-in-kind notes and recaps

Non-standard bonds, such as PIK notes and dividend recapitalisations, have been making a comeback

Non-standard bonds, such as payment-in-kind (PIK) notes and dividend recapitalisations, have been making a comeback and are beginning to sound alarm bells on both sides of the Atlantic.

Two weeks ago, Thomas D Higgins, chief economist at BNY Mellon's specialist asset manager Standish, warned in a research note that there were areas of the bond market where investors were not being properly compensated for risk.

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