The world's largest toy retailer, U.S. firm Toys R' Us, recently closed an innovative securitization that parcels the license fees that Toys R' Us Japan pays to the parent company. The deal provides dollar funding at the current cheap Japanese interest rates and also locks in the current favorable yen/dollar exchange rate.

The 16 billion ($147 million) transaction monitizes the 3% royalty on gross sales that the Japanese operation pays to the parent for the right to use its brand. Toys R' Us Japan is 48% owned by the U.S. company, which is rated A-minus by Standard & Poor's. The deal has a 3.5-year average life and a five-year final maturity.

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