It is prohibited under German law (section 248 and 289 s. 1 German Civil Code) for Borrowers to agree to pay "interest on interest", or in other words, agree in advance to paid-in-kind interest which is automatically deferred or capitalized. If the capitalization of the interest is at the election of the German borrower, this is generally not prohibited, therefore the use of "PIK Toggle" facilities is not uncommon for such loans. Other ways of addressing this include the provision for "premium" which is often drafted as a one-off fee due to the Lenders on payment or repayment of the loan. Premium is therefore akin to a "Non-Recurring Fee" under the LMA standard terms and conditions and is different to interest or PIK. Non-Recurring Fees are for the account of the Buyer when paid and are deducted under the calculation of the Settlement Amount (so are for free) under Conditions 14.2(c) and 15.9(c) in accordance with market convention. That said,"premium" is not expressly provided for under the LMA standard terms, as it is not a common feature of English law governed loans agreement. To avoid any misunderstanding, if you are trading a loan with premium, better to be explicit regarding the parties' expectations at the time of trade.