Toys ‘R’ Us bonds downgraded, end down; Nortel Networks softens as settlement talks go on

By Stephanie N. Rotondo

Phoenix, June 26 – Toys “R” Us Inc. received a rating downgrade from Fitch Ratings on Thursday, further pressuring the struggling retailer’s debt.

One trader said the 7 3/8% notes due 2018 ended the day off 3½ points at 75. He noted that the bonds were down 5 points in just a couple of days.

“That’s a rough one for Toys ‘R’ Us,” he said.

Late last week, Toys “R” Us announced that it had fired its chief financial officer, F. Clay Creasey Jr. No reason was given for the termination, but the company has not been faring well financially, as stores like Wal-Mart Stores, Inc. and Amazon.com, Inc. take away market share.

Michael J. Short, a former CFO for AutoNation, will replace Creasey.

Elsewhere in the retail space, a trader said J.C. Penney Co. Inc.’s 5.65% notes due 2020 fell half a point to 88.

Another trader said RadioShack Corp.’s 6¾% notes due 2019 were “better,” trading around 40.

A trader said Nortel Networks Corp.’s 10¾% notes due 2016 were on the active side, but softer on the day.

The Canadian telecommunications manufacturing company has spent the better part of the last three years in bankruptcy. However, its time under Chapter 11 protections may soon be coming to an end, as the company has begun settlement talks with creditors over how to divvy up about $7.3 billion.

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