Deals involving the structure, whereby issuers may deliver either payment-in-kind (PIK) notes or cash to their investors, have so far been relatively thin on the ground but strong demand for high-yielding paper has driven the cost of toggle notes down to a level that could prove extremely attractive.
The notes are more expensive than straight debt for the issuer, with market consensus suggesting that the extra flexibility of delivering cash or PIK option is worth around 25 basis points.
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