Saks Bond Suffers $1 Billion Loss Before a Single Payment Is Made

It was supposed to be just what Saks needed to turn things around. By taking over struggling rival Neiman Marcus, the pitch went, the iconic retailer would become a luxury powerhouse — one with enough bargaining and pricing power to cut costs and boost profitability.

So when the company turned to the bond market to finance the takeover last December, investors were drawn in. Sure, there was some skepticism, but a juicy 11% interest rate, pledges on some of its assets and big-time backers including Amazon.com Inc. and Salesforce Inc. assuaged their concerns. They shelled out $2.2 billion, $200 million more than Saks originally sought.