Moody’s: Toys ‘R’ Us to stable

Moody's Investors Service said it changed Toys ‘R’ Us, Inc.'s outlook to stable from negative and affirmed the B3 corporate family and the SGL-2 speculative grade liquidity ratings.

"Today's actions recognize the significant progress Toys has made over the past year in improving its operating performance via much stronger execution of a well-thought out strategy, with the result we estimate debt/EBITDA will end the year below 6 times," Moody's vice president Charlie O'Shea said in a news release.

"Toys has reversed several negative trends, and is also gaining traction in key online-related areas including mobile and more customer-focused marketing.”

“A key remaining risk is the next round of debt maturities, $450 million of Caa2-rated Holdco notes in August 2017, and $725 million of Ba3-rated mortgage debt at Propco II in December 2017. We note that since the July 2005 LBO, Toys has been in almost constant refinance mode with its highly-leveraged capital structure. Our ratings and stable outlook assume that future refinancings will be successfully executed as well," O’Shea added in the release.

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