Bed Bath & Beyond notes mostly higher; Michaels paper better on week; Rite Aid improves

By Cristal Cody

Tupelo, Miss., July 20 – Distressed retailer Bed Bath & Beyond Inc.’s paper attracted plenty of secondary interest on Wednesday following Moody’s Investors Service’s downgrade of the company.

The senior notes (Caa3/B-) were flat to about 6 points better in heavy trading activity.

“The ‘44s are up today,” a source said.

Moody’s downgraded the issuer and the senior bond ratings and changed the company’s outlook to negative from stable, noting steep declines in revenue and the “rapid departure of the company’s CEO and chief merchandising officer.”

Market tone remained strong for a second session on Wednesday with stock indices ending higher.

The Nasdaq was up 1.58%.

The iShares iBoxx High Yield Corporate Bond ETF went out up 34 cents, or 0.45%, at $76.10.

Also in the distressed retail landscape, Michaels Cos., Inc.’s 7 7/8% senior notes due 2029 (Caa1/CCC+) improved ¼ point and were trading about 1 point higher this week.

In the pharmacy retail space, Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/BB-) traded about 3 points better in thin supply on Wednesday.

Bed Bath & Beyond gains

Bed Bath & Beyond’s notes traded flat to 6 points higher in heavy trading action on Wednesday, according to market sources.

The retailer’s 3.749% senior notes due 2024 (Caa3/B-) jumped about 6 points to the 46 bid area by the close.

Bed Bath & Beyond’s 5.165% senior notes due 2044 (Caa3/B-) rose to 20¾ bid, up about 1¼ points.

In June, the Union, N.J.-based home products retailer’s notes slid into the distressed space after the company reported a heavy first-quarter loss and a shake-up of its senior management.

Michaels edges higher

Michaels’ 7 7/8% senior notes due 2029 (Caa1/CCC+) improved ¼ point to 67 7/8 bid in steady secondary action on Wednesday, a source said.

The notes were about 1 point better on the week.

Earlier in July, Michaels was downgraded by Moody’s and given a negative outlook from S&P Global Ratings.

The Irving, Tex.-based arts and crafts retailer was taken private by funds managed by Apollo Global Management, Inc. affiliates in 2021.

Rite Aid secureds up

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) rose about 3 points to the 83 bid area in thin secondary activity on Wednesday, a source said.

The issue was trading about 4 points stronger this week.

The Camp Hill, Pa.-based drug retailer completed a tender offer in June for three tranches of bonds but declined to accept any of the 8% notes tendered.

Distressed index positive

The S&P U.S. High Yield Corporate Distressed Bond index remained positive but softened on Tuesday.

One-day total returns fell to 0.34% from 0.67% at the start of the week.

Month-to-date total returns improved to minus 0.79% from minus 1.13% on Monday.

Year-to-date total returns rose to minus 23.24% on Tuesday from minus 23.5% in Monday’s session.

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