News this week that the European Central Bank is hiking its rates a quarter of a percentage point to 3.75% following Bank of England’s hike to 5% makes grim reading for companies servicing already sizeable debt stacks. As much of 66% of EBITDA (see below) draining into interest payments makes the argument for payment-in-kind (PIK) toggles (allowing the company to pay its private credit lenders’ interest in something other than cash) all the louder.

Indeed, as 9fin reminded us this week, PIK and committed acquisition / capex facilities are essential components of debt structures should a company wish to pursue strategies other than covering its interest payments.