Burger and Taco Restaurant Bonds Suffer as America Locks Down
- Spreads on some securities have nearly tripled since January
- Lost revenue means multiple bonds may get downgraded
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Bonds that securitize revenues from restaurants such as Wendy’s, Domino’s Pizza and Taco Bell have seen big declines as consumers shelter at home.
Restaurant chains that issue bonds backed by franchise fees, future royalties and other revenue-generating assets have seen them battered by the coronavirus pandemic. In many cases, average spreads on the so-called whole-business securitizations more than doubled, or even tripled, in secondary trading from three months ago. And more trouble may lie ahead as downgrades become increasingly likely.