Toys ‘R’ Us Investors Show Doubt of Repayment: Corporate Finance
This article is for subscribers only.
Toys “R” Us Inc. is paying the highest yields among 16 issuers of CCC+ rated bonds as investors grow dubious the retailer with three years of falling profit will repay or refinance $2.85 billion of debt due through 2016.
The company’s $450 million of 10.375 percent notes maturing in August 2017 yield 15.9 percent, 9.69 percentage points more than the average for the top tier of CCC bonds in the Bank of America Corp. U.S. High Yield Super Retail Index. A 15 percent yield indicates a 33 percent risk of default within one year, according to Martin Fridson, chief executive officer of FridsonVision LLC, a New York research firm specializing in high-yield debt.