After reading the Moody's report on Toys R Us, I found them to have ample liquidity to cover their 2018 non callable bond. It's coupon is 7.375% and as of 12/26/13 it is trading at 74.25 cents on the dollar yielding to maturity 15% (CUSIP 892335AL4) Toys R Us is the industry brick and mortar leader for toys and had recently paid a portion of and refinanced the rest of it's 2013 debt. Moody's rates Toys R us as B2, Stable, and Not on Watch so it is not unreasonably speculative to buy their bonds especially when their yield to maturity is 15% and the maturity date is only 2018.
Toys R Us was taken private in an LBO by Bain Capital and other companies in 2005 and this 2018 bond is part of the legacy debt that is before that time. Risks to my Buy recommendation are that the mark to market value of the bonds may suffer as the Fed raises rates and ends the taper but as long as you hold on to them till maturity, bonds do not lose you money assuming no default on payments. I find it unrealistic that Toys R Us will go bankrupt because of online competition. Toys R Us and Baby's R Us have a strong online websites for toys that I used when searching for a Playstation 4. Baby's R Us is also a strong brand and both Toys and Baby's have got to have strong ties with manufacturers like Mattel and Hasbro after so many decades of being the industry leader.
As the economy grows and population resumes it's growth, there always will be room for the industry leading brick and mortar retailers like Toys R Us for kids to visit in person.
This being my first SA article, it had to be a good one and Toys R US 2018 bonds are a fairly safe bet IMHO. I just pulled the trigger on this bond (CUSIP 892335AL4) today for myself with intent to hold till maturity.
Disclosure: I am long TOYS.
Additional disclosure: I own Toys R Us Bonds CUSIP #892335AL4