CORPORATESISSUER COMMENT 22 February 2016RATINGSTOYSRUS, INC. (TOY) Moodys SR Unsecured Rating Caa2Moodys Outlook NEGBond-Implied Rating Caa3CDS-Implied Rating Caa2EDF-Implied Rating naAs of February 19, 2016ContactsAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research,Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products.For further detail, please see the last page.Market Signals ReviewToysRUs: Market Signals Rally TOYs bond- and CDS-implied ratings both improved from their levels 90 days ago. The bond-implied rating rose by two notches to Caa3, while the CDS-implied rating advanced by three notches to Caa2 (Figure 1). ToysRUs is facing a refinancing challenge from $1.6 billion in three bonds maturing through 2018. The better market-implied ratings indicate that some investors are gaining comfort with TOYs recent refinancing plans and more positive operating results.FIGURE 1. TOYSRUS: MOODYS AND MARKET-IMPLIED RATINGS, 90 DAYS (DAILY DATA)The bond- and CDS-implied ratings for ToysRUs both fell to the level of C the weakest possible market-implied rating on multiple dates between May 2015 and January 2016, matching their worst levels of the last five years (Figure 2).The bond-implied rating reached a five-year peak of Ba1 in April 2011. Since then it slid steadily lower to C in October 2013. It rebounded to Caa2 on multiple dates between June 2014 and August 2015.Thecompanys CDS-implied rating reached a five-year high point of B2 on multiple dates, most recently in March 2012. Since then it has generally descended, with the exception of aMOODY'S ANALYTICS CORPORATES2 22 February 2016 Market Signals Review: ToysRUs: Market Signals Rallyfew brief upward spikes, notably in April of 2014 and June of 2015. Most recently it rallied by three notches from C on January 20, 2016 to Caa2 at present.ToysRUs does not have an EDF'-impl...
