Bed Bath & Beyond paper slides over 10 points, stock plunges; Rite Aid softens; Endo up

By Cristal Cody

Tupelo, Miss., Aug. 19 – Bed Bath & Beyond Inc.’s notes sank more than 11 points on Friday on news reports of restricted shipments amidst unpaid bills and a stock dump.

The retailer’s 5.165% senior notes due 2044 (Caa3/B-) sank 11 1/8 points.

Bed Bath & Beyond’s stock plunged 40.54% to close at $11.03.

The company reported in a statement on Thursday that it plans to provide an investor update at the end of the month.

Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/BB-) softened more than 2 points during the session but remained up from July.

Rite Aid, Wendy’s International, LLC and iHeart Communications, Inc. were among companies with tighter credit default swap spreads over the past week, a market source said.

Rite Aid’s CDS spreads firmed more than 50 basis points.

In CCC-rated debt, the peak distress of 50% has been cut to 27%, according to a BofA Securities, Inc. note on Friday.

“This is still a high number, but an incredibly fast turnaround,” according to the note.

“Distress is disappearing fast in the HY market,” the analysts said. “Only 5.3% of face value of the U.S. HY index is now trading at distressed levels, half of the peak in mid-July.”

Overall distressed action has been quiet this week with some market participants out for late summer vacations, sources report.

Financial tone weakened on Friday with stock indices down across the board. The S&P 500 index closed down 1.29%.

The iShares iBoxx High Yield Corporate Bond ETF fell 79 cents, or 1.02%, to $76.95.

The CBOE Volatility index jumped 5.32% by late in the day to 20.60.

Newly bankrupt Endo International plc’s paper went out about ¼ point to more than 2½ points higher in mostly light trading.

Endo reported in a regulatory filing on Friday that its Chapter 11 bankruptcy filing this week triggered an event of default on its debt.

Bed Bath & Beyond down

Bed Bath & Beyond’s 5.165% senior notes due 2044 (Caa3/B-) sank 11 1/8 points by late afternoon, going out at 16¼ bid, a source said.

The issue saw $15 million of paper changing hands.

Bed Bath & Beyond’s notes had improved more than 10 points since mid-July and were quoted Tuesday at 31 bid on $9 million of volume.

The company’s 3.749% senior notes due 2024 (Caa3/B-) shed more than 11½ points over the day to a 39 handle, down from a 53 handle on Tuesday. Trading was lighter with $3 million of volume.

The paper came under heavy pressure in June following the Union, N.J.-based home products retailer’s weak first-quarter earnings announcement and shake-up of senior management.

Bed Bath & Beyond’s stock closed Friday down $7.52, or 40.54%, at $11.03.

Rite Aid weakens

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) traded at the 86, 87 range during the session, a market source said.

The notes headed out at the 86 bid area, down more than 2 points from Thursday.

Rite Aid’s issue is up about ¾ point since July.

Meanwhile, the Camp Hill, Pa.-based drug retailer’s CDS spreads firmed 57 bps to 1,451 bps for the past week ended Wednesday, a source said.

Endo higher

Endo’s notes improved about ¼ point to more than 2½ points in mostly light trading over the session, a source said.

Subsidiary Par Pharmaceutical Inc.’s 7½% senior secured first-lien notes due 2027 (Caa2/D) traded 2 5/8 points better at 87 5/8 bid on $2 million of secondary supply, a source said.

The issue has gained more than 3 points in trading since the company filed for Chapter 11 on Tuesday in the U.S. Bankruptcy Court for the Southern District of New York.

Endo said in the 8-K filing with the Securities and Exchange Commission on Friday that the bankruptcy filing constitutes an event of default on its debt.

Endo also announced that it was notified on Wednesday by the Nasdaq Stock Market that its common stock will be delisted.

The Dublin-based pharmaceuticals company entered into a restructuring agreement with stalking horse bidder Ad Hoc First Lien Group, which is made up of certain creditors holding more than 50% of its outstanding secured debt.

Distressed index drops

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns weakened over the back half of the week.

One-day returns declined to minus 0.27% on Thursday from minus 0.48% on Wednesday, 0.05% on Tuesday and 0.47% on Monday.

Month-to-date total returns dropped to 3.76% on Thursday from 4.40% on Wednesday, 4.54% on Tuesday and 4.49% at the start of the week.

Year-to-date total returns widened to minus 17.68% on Thursday from minus 17.46% on Wednesday, minus 17.07% on Tuesday and minus 17.11% on Monday.

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