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Wednesday, 13 December 2017

Toys R Us bonds plummet on bankruptcy reports

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Bonds issued by Toys R Us hit new lows on Monday following reports that the toy store chain may file for bankruptcy to alleviate its crushing debt load.

The privately held retailer’s 7.375% unsecured 2018s fell 20 points to as low as 23 cents on the dollar, according to Trace data, as investors abandoned the debt-laden company.

One portfolio manager told IFR that at least one dealer was quoting the paper as low as 15 cents in the early afternoon.

The bonds had been trading above 95 cents until news broke on September 6 that the company had hired law firm Kirkland & Ellis to help weigh restructuring options. nL2N1LN25A

The latest leg down came on Monday on reports could be filing for bankruptcy as soon as this week.

Some of the toy chain’s secured debt instruments, including term loans and bonds, were quoted between 45 and 80 cents on Monday, depending on their seniority, a second investor said.

Earlier this month rating agency S&P downgraded Toys R Us to CCC+ from B-.

 

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