by Calculated Risk on 7/02/2008 05:06:00 PM

S&P Leveraged Commentary & Data released today: Harrah's joins 8 toggle issuers electing PIK; cash-pays buckle (link for those with access).

S&P reports Harrah's Entertainment announced today that it will be paying the $1.4 billion in senior PIK toggle bonds with additional debt instead of cash. According to S&P, this is the 9th toggle bond, totaling $4.1 billion in debt, electing the PIK option.

These Payment-in-kind (PIK) features can be toxic. The bond issuer just elects to issue more debt instead of making the interest payment, and this is usually bad news ... a NegAm loan for corporations!