Retail loan default rate spikes on Toys "R" Us bankruptcy
This week's Chapter 11 bankruptcy filing by Toys "R" Us drove the retail institutional leveraged loan default rate past 7%, and Fitch Ratings warns that it could top 10% by year-end. Toys "R" Us has $5.27 billion in long-term debt, of which $2.85 billion will be affected by the bankruptcy.
What to watch: Fitch believes the tipping point could be Sears, which said in March that "substantial doubt exists related to the Company's ability to continue as a going concern." Other problematic retailers include Nine West, TOMS Shoes, Eddie Bauer, Charlotte Russe and Charming Charlie.