The Athlete's Foot Stores' recent bankruptcy filing is not expected to have a material impact on the shoe retailer's securitization backed by franchise fee revenues, sources familiar with the situation said. However, analysts at Moody's Investors Service are not taking any risks, and have placed the bonds on review for a possible downgrade.

The $30 million single-tranche 4.2-year offering came out of the gate with a rating of Baa3' from Moody's in Sept. 2003. The franchise operator announced that it would voluntarily liquidate roughly 120 of its more than 700 stores last month. All 120 stores are owned by a single franchisee, according to published reports. Of those 120 stores, 20 are responsible for the majority of the franchise royalties, said Robert D'Loren, president and CEO of UCC Capital Markets, the placement agent on the private securitization. "It is expected that those 20 stores will be converted to individually owned franchise stores," D'Loren said.

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