Bed Bath & Beyond sinks on net loss, board shake-up; Community Health, Bausch lower

By Cristal Cody

Tupelo, Miss., June 29 – Bed Bath & Beyond Inc.’s senior notes plunged about 10 points in active secondary trading on Wednesday in the wake of dismal earnings and the ouster of the company’s chief executive officer.

The distressed retailer’s long bonds dropped to a 20s handle over the session after Bed Bath & Beyond announced revenue fell 25% in the fiscal first quarter ended May 28 and reported net losses widened to $358 million from a loss of $51 million in the same quarter last year.

Bed Bath & Beyond also announced several senior leadership changes, including that it named an interim CEO to replace Mark Tritton, who will leave his role as president, CEO and a member of the board.

The company also reported it was taking steps to improve sales and inventory with the change in its senior leadership expected “to focus on reversing recent results, addressing supply chain and inventory, and strengthening its balance sheet.”

The home products retailer in April reported fiscal fourth-quarter losses following difficulty in securing inventory.

S&P Global Ratings said in a report Tuesday that “many corporate borrowers we rate continue to deal with sharply higher input costs and supply chain disruptions that have been exacerbated by the rising energy and commodities prices caused by the Russia-Ukraine conflict.”

“With consumers becoming more price sensitive, companies' abilities to pass along these costs is finite,” S&P noted. “If cost pressures don't ease, or if inflation begins to weigh heavily on demand, the resultant profit erosion will inevitably hit credit quality.”

The agency said that it now expects the U.S. trailing 12-month speculative-grade corporate default rate to hit 3% by March 2023, more than double the 1.4% in March of this year.

Financial markets were mixed on Wednesday with stocks little changed by the end of the day.

The iShares iBoxx High Yield Corporate Bond ETF edged down 0.15% to $73.65.

In other distressed secondary action Wednesday, Community Health Systems Inc.’s notes remained under pressure.

The health care operator’s bonds were down ½ point to 2¾ points and trading more than 1 point to 3½ points lower on the week.

Bausch Health Cos. Inc.’s 5¼% senior notes due 2031 (B3/B-) also fell ½ point in strong trading activity during the session.

Bed Bath declines

Bed Bath & Beyond’s 5.165% senior notes due 2044 (B3/B+) sank 9½ points to head out near the 26¼ bid range on $14 million of paper traded on Wednesday, a source said.

The notes have dropped from the 39 bid area in mid-June.

Bed Bath & Beyond’s 3.749% senior notes due 2024 (B3/B+) plunged 11 points to 60 bid on light trading totaling $4 million on Wednesday.

The Union, N.J.-based home products retailer’s issue was quoted at 72½ bid on June 14.

CHS under pressure

CHS/Community Health Systems, Inc.’s 6 1/8% senior secured notes due 2030 (Caa2/CCC) went out more than ½ point softer at a print of 63.825 bid, a source said Wednesday.

The notes have declined more than 1 point this week and about 10 points since the start of the month.

CHS/Community Health’s 6 7/8% notes due 2029 (Caa2/CCC) also dropped about 2¾ points to the 65½ bid range by the close.

The issue is down about 3½ points since Friday and has given back about 30 points since the Franklin, Tenn.-based operator of acute care and outpatient facilities reported a first-quarter loss in April.

Bausch Health lower

Meanwhile, Bausch Health’s paper continued to soften in active trading on Wednesday, a source said.

The company’s 5¼% senior notes due 2031 (B3/B-) fell ½ point to 57½ bid by the end of the session.

Secondary supply was busy with $12 million of paper traded.

The Laval, Quebec-based pharmaceutical company’s notes were down about 2¾ points since last week.

Distressed returns down

S&P U.S. High Yield Corporate Distressed Bond index returns remained weak on Tuesday.

One-day total returns fell to minus 0.58% from minus 0.11% on Monday.

Month-to-date total returns were lower at minus 6.47% versus minus 5.92% at the start of the week.

Year-to-date, index returns dropped to minus 20.04% from minus 19.57% on Monday.

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