EXCLUSIVE: Experts Sound Alarm On Private Credit's PIK Surge

Benzinga · Caroline Ryan · 2026-11-06 11:30 UTC

The growing use of PIK interest in private credit is raising questions about borrower financial health, as more companies defer cash payments.

The growing use of payment-in-kind (PIK) interest in private credit is raising questions about borrower financial health, particularly as more companies defer cash payments and push debt obligations further into the future.

PIK allows borrowers to pay interest by adding it to their outstanding loan balance rather than making cash payments. While the structure can help companies manage short-term cash flow pressures or finance growth, experts warn that it becomes more concerning when borrowers rely on it because they cannot afford their debt payments.

"I’m more concerned about borrowers repeatedly extending or capitalizing interest without any meaningful improvement in cash flow," Nick Panize, president of Westgate Capital Ventures, told Benzinga in an interview.

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