PIK stands for "Payment-in-Kind" and refers to the use of a good or service as payment instead of cash, or a financial instrument that pays interest or dividends. PIK securities are a type of mezzanine financing, where they have characteristics indicative of debt and equities. They tend to pay a relatively high rate of interest but are considered risky. PIK interest, or "paid in kind" interest, is a feature of debt that allows interest expense to be accrued for a set number of years, rather than being paid in cash in the current period. In exchange for the deferred payout of the cash interest expense and the borrower retaining the cash for additional time, the debt principal coming due on the date of maturity increases. PIK bonds are a type of bond that pays interest in additional bonds rather than in cash during the initial period. They are usually issued by financially distressed companies and may have low ratings and normally pay interest at a higher rate. Although they may provide some financial relief, PIK bonds add to liquidity problems as the debt has to be paid off at some point.

In summary, PIK can refer to:

• The use of a good or service as payment instead of cash
• A financial instrument that pays interest or dividends
• A feature of debt that allows interest expense to be accrued for a set number of years, rather than being paid in cash in the current period
• A type of bond that pays interest in additional bonds rather than in cash during the initial period