Hooters’ Problems Pose a Test for Securitizations
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A form of Wall Street financial engineering that’s become popular with chain restaurants is about to get a serious stress test, as Hooters heads toward bankruptcy and TGI Friday’s remains mired in one.
Whole-business securitizations took off over a decade ago, allowing retail chains to raise money more cheaply than in junk bond markets by promising future cashflow from their franchised restaurants and stores. There are now about $36 billion of the bonds outstanding, according to JPMorgan Chase & Co.