Tuesday, September 19, 2017

Toys R Us Joins Retailers In Bankruptcy

With $5 billion in debt, Toys R Us becomes the second largest retailer in U.S. history to file bankruptcy, following only KMart. The bankruptcy filing is at the worst possible time for the company as it is ramping up inventory for the fourth quarter, which typically accounts for about 40 percent of the company's revenue. Overall, 2017 has been a bad year for retailers as 35 retailers have filed for bankruptcy, including Wet Seal and Radio Shack, who filed Chapter 22 bankruptcies.

An IPO Set To Fly Or Crash

Finnish mobile game maker Rovio has set the price for the company's IPO. The maker of Angry Birds will have a value of about $1 billion based on the IPO price. The company will sell about 55 percent of its shares, with current owner Trema International retaining about 37 percent ownership. The IPO price of 10.25 to 11.50 euros values the company about the same as peers, but does include an expectation for profit growth.

Monday, September 11, 2017

Hurricane Irma And Cat Bonds

Our thoughts and prayers go out to those affected by Hurricane Irma. Fortunately, Irma weakened as it approached the U.S. and property damage estimates dropped from $200 billion to $49 billion, although the final tally won't be known for months. As you can imagine, large natural disasters such as this affect financial markets. Last week, the stock market fell and the dollar weakened based on the dire projections, although both have rebounded today, in part because of the storm's weakening. However, no financial instrument was hit as hard as cat bonds based on hurricane damage in Florida. In fact, one cat bond that was recently issued by Heritage Insurance Holdings fell to 50 cents on the dollar. The cat bond market has reached $90 billion, and almost one-half is tied to Florida hurricane damage.