Calculator
PIK interest and toggle option
The calculator tracks the principal of a bullet loan year by year when part of the interest is capitalised. It gives the amount due at maturity and the extra cost of capitalisation compared with a coupon paid in full in cash every year.
Amount due at maturity
€49.77m
principal and capitalised interest, repaid in one instalment
| Interest paid in cash | €7.91m |
|---|---|
| Capitalised interest | €19.77m |
| Interest over the life of the loan | €27.68m |
| Interest with a fully cash-paid coupon | €21.00m |
| Extra cost of capitalisation | €6.68m |
| Effective rate | 10.50% |
| Year | Principal at start of year | Interest paid | Capitalised interest | Principal at end of year |
|---|---|---|---|---|
| Year 1 | €30.00m | €0.90m | €2.25m | €32.25m |
| Year 2 | €32.25m | €0.97m | €2.42m | €34.67m |
| Year 3 | €34.67m | €1.04m | €2.60m | €37.27m |
| Year 4 | €37.27m | €1.12m | €2.80m | €40.06m |
| Year 5 | €40.06m | €1.20m | €3.00m | €43.07m |
| Year 6 | €43.07m | €1.29m | €3.23m | €46.30m |
| Year 7 | €46.30m | €1.39m | €3.47m | €49.77m |
The initial values are a sample input to replace with the terms of your offer. This calculation gives an order of magnitude and does not bind any lender.
Method
The calculation formulas
PIK interest is added to the principal and itself bears interest the following year. With the toggle option, the borrower capitalises part of the cash coupon at a rate increased by the margin step-up set in the loan agreement. The extra cost compares the interest on the loan with the interest on a coupon of the same nominal rate paid in cash every year.
Capitalised interest
Capitalised interest = principal at start of year × (PIK coupon + capitalised share × (cash coupon + step-up))
Amount due at maturity
Amount due = initial principal + sum of the interest capitalised each year
Extra cost
Extra cost = cash interest + capitalised interest − principal × (cash coupon + PIK coupon) × maturity
Example
Worked example
A €30m bullet loan over 7 years carries a cash coupon of 6.00% and a PIK coupon of 4.00%. The borrower exercises the toggle option on 50.00% of the cash coupon with a step-up of 1.00%. The amount due at maturity reaches €49.77m, of which €19.77m is capitalised interest. Capitalisation costs €6.68m more than a coupon paid in full in cash and brings the effective rate to 10.50%. The terms of this example are sample inputs.
Benchmarks
Mezzanine and PIK in private debt in France
| Type of debt | Transactions 2025 | Transactions 2024 |
|---|---|---|
| Mezzanine and subordinated debt | 68 | 82 |
| of which PIK transactions | 23 | 22 |
Activity in France of French and foreign funds, corporate debt excluding infrastructure. Amounts invested in mezzanine and subordinated debt: €1,338m in 2025 and €1,169m in 2024.
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