Private Equity’s New Way to Defer M&A Debt Costs: Credit Weekly

Private equity giants are turning to a new take on an old solution to higher debt costs for M&A deals: borrow all of the money they can and defer paying it back.

KKR & Co. is asking private credit funds for a so-called payment-in-kind feature that would allow it to push off all cash interest payments if and when it purchases a 50% stake in health care analytics company Cotiviti Inc. The company is looking for $5 billion to $6 billion of debt for the deal.

While direct lenders have yet to agree to KKR’s ask, their willingness to keep ...