Bonds backing Toys R Us renewed their recent dramatic slide on Friday.
The bonds traded at just 46 cents on the dollar on Friday, down from around 65 on Thursday and a drop of 51 points (from 97) two weeks ago, prior to the debt restructuring announcement.
Several news stories are said to be behind Friday’s decline. Debtwire reported that Toys R Us has retained Prime Clerk, a bankruptcy claims and noticing agent, while Bloomberg followed Debtwire with reports that the company’s vendors have scaled back shipments on heightened bankruptcy fears.
The Toys R Us loan due April 2020 was quoted at a 63.875 bid on Friday, down two points from the last session, and a fresh low for the year. The paper has dropped more than 10 points since the start of the month.
Initial expectations had pointed to a potential distressed exchange for the 2018 notes, given that the fall in bond prices would facilitate a take-out at a much more favourable price. However, because of the negative price action, sources have suggested that bankruptcy in the form of a pre-pack is looking increasingly possible.