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Neiman Marcus Debt Falters, CDS Cost Widens As Retail Sector Takes Hit

Debt backing Neiman Marcus was lower today retail feels the weight of a sector malaise, with Macy’s having disappointed at market close last night, Fossil shares plunging on its troubling results, and concerns throughout the space, including with Nordstrom reporting quarterly results tomorrow. Shares of the companies this morning were down almost 14%; 28%; and nearly 7%, respectively, trade data show.

Over in the mixed secondary high-yield bond market, Neiman paper has slipped roughly three points apiece, with the 8% cash-pay notes due 2021 bracketing 80 and the 8.75% PIK-toggle notes due 2021 pegged at 77/78, according to sources. Both were fairly active in trading, with recent large prints in the CCC/Caa2 issues at 79.5 and 76.875, respectively, trade data show.

Over in the CDS marketplace, five-year protection on the credit was just 3% wider, at 317.5/367.5 bps, according to Markit.

Meanwhile in the loan market, the Neiman Marcus term loan due 2020 (L+325, 1% LIBOR floor) was marked at 93.5/94, sources said. That’s little changed from levels late yesterday, but off about 1.75 points from late last week, the sources added.

Note the paper had been drifting lower yesterday ahead of the results from Macy’s as well as Nordstrom and J.C. Penney later this week. There was about $2.88 billion outstanding under Neiman’s term loan as of Jan. 30, SEC filings show. Credit Suisse is administrative agent.

As per Nordstrom reporting tomorrow, recall that Neiman Marcus debt was lower in February after that rival reported weak results (see "Neiman Marcus TL dips as Nordstrom's 4Q misses Street expectations," LCD News, Feb. 16, 2016).

Take note that while the Neiman bonds were notably lower today, the pair are well above the record lows of the high 60s and the high 50s in January amid the New Year market crush. And just a few months earlier, they were par-plus paper, falling just under par after similarly bad news out of Macy's (see "Neiman Marcus debt declines after rival Macy's lowers guidance,"LCD News, Nov. 12, 2015). — Matt Fuller/Kerry Kantin

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