S&P cuts Toys ‘R’ Us view to negative

S&P said it affirmed its ratings on Toys ‘R’ Us Inc., including the B- corporate credit rating, and revised the outlook to negative.

“The outlook revision to negative reflects our view of the potential for challenges to a timely refinancing over the next year of the 2018 debt maturities, given the volatile capital market environment for most leveraged specialty retailers,” said S&P credit analyst Robert Schulz in a news release.

“We note market prices for the 2018 and 2019 maturities appear to be near par.”

S&P said the rating on Toys reflects ongoing intense competition from online and large big-box retailers that will pressure market share and revenues, but also expectations for modest free operating cash flow in 2017 after inventory growth in 2016 used cash.

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