Fitch Solutions: Credit Protection on Toys R Us CDS Reaches Four-Year High
Credit default swap (CDS) spreads for Toys R Us have widened out 20% over the past month, according to the latest case study from Fitch Solutions.
Credit protection on Toys R Us is now pricing at the highest levels observed since 2009. 'The widening CDS seems to be signaling mounting market concern as Toys R Us continues to face increasing competition from online retailers and discounters,' said Director Diana Allmendinger.
CDS liquidity for Toys R Us has decreased over the past two months. CDS referencing Toys R Us is now trading in the 18th regional percentile, compared to seventh at the end of August. The decline in CDS liquidity may be indicative of market participants' hesitation to take positions on Toys R Us at wider spread levels,' said Allmendinger.
Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.
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Diana Allmendinger, +1 212-908-0848
33 Whitehall Street
New York, NY 10004
Sandro Scenga, +1 212-908-0278