Bed Bath & Beyond paper climbs on exchange offers extension; Rite Aid notes improve

By Cristal Cody

Tupelo, Miss., Nov. 16 – Bed Bath & Beyond Inc.’s bonds rallied on Wednesday after the distressed retailer extended the exchange offers for its three tranches of senior notes to Friday.

The 3.749% senior notes due 2024 (C/D) have jumped more than 10 points this week.

On Monday, Bed Bath & Beyond reported it entered into privately negotiated exchange agreements with holders of its 3.749% senior notes due 2024, 4.195% senior notes due 2034 and 5.165% senior notes due 2044 to exchange bonds for shares of common stock.

The company is offering to exchange any and all of its outstanding notes for new second- and third-lien debt.

Meanwhile Wednesday, Veritas US Inc.’s 7½% senior secured notes due 2025 (B3/B-) traded down 6½ points to the 73¾, 74¼ bid area on reports that Veritas Technologies LLC posted soft quarterly earnings, a source said.

The bonds ended the prior week with an 82 handle.

Veritas in July was listed among the largest and most distressed names with $1.75 billion of debt, according to a BofA Securities Inc. note.

While volatility waned over the session, stocks stayed depressed with indices all closing lower. The Nasdaq was down 1.54%.

The CBOE Volatility index fell 1.43% to $24.19 by the day’s end.

The iShares iBoxx High Yield Corporate Bond ETF gave back 16 cents, or 0.21%, to $74.39.

Cooper-Standard Automotive Inc.’s 5 5/8% senior notes due 2026 (Caa2/CCC-) were quiet in the secondary market on Wednesday a day after Cooper-Standard Holdings Inc. reported it entered into transaction support agreements with noteholders.

The issue has dropped more than 40 points since the start of the year.

Also Wednesday, Rite Aid Corp.’s 7½% senior secured notes due 2025 (B3/CCC-/CCC) added 7/8 point on more than $1 million of paper traded.

Bed Bath & Beyond climbs

Bed Bath & Beyond’s short-dated notes climbed in renewed secondary interest on Wednesday as the retailer extended its exchange offers to the end of the week, a source said.

The 3.749% senior notes due 2024 (C/D) rallied to 36¼ bid by late afternoon.

The notes were seen Monday at 29½ bid, 4½ points higher from where the issue went out the prior week.

Bed Bath & Beyond’s 4.195% senior notes due 2034 improved more than 1¼ points to 15 3/8 bid during the session.

The 5.165% senior notes due 2044 rose about ¼ point in thin trading to the 14½ bid area on Wednesday.

On Monday, Bed Bath & Beyond reported it entered into privately negotiated exchange agreements with holders of its 3.749% senior notes due 2024, 4.195% senior notes due 2034 and 5.165% senior notes due 2044 to exchange about $69 million of 2024 notes, $15.3 million of 2034 notes and $70.2 million of 2044 notes for 14.5 million shares of common stock.

Under the offers extended until 11:59 p.m. ET on Friday, Bed Bath & Beyond will exchange the 3.749% notes for new 3.693% senior second-lien secured non-convertible notes due 2027 and/or new 8.821% senior second-lien secured convertible notes due 2027; the 4.915% notes for new 12% senior third-lien secured convertible notes due 2029; and the 5.165% notes “and collectively with the 2024 notes and the 2034 notes” for new third-lien convertible notes.

Bed Bath & Beyond also is soliciting consents to amend the indenture governing the old notes.

The retailer said that as of 11:59 p.m. ET on Tuesday, 16.93% of the 3.749% notes, 24.39% of the 4.915% notes and 11.31% of the 5.165% notes have been validly tendered.

S&P Global Ratings dropped the retailer to selective default on Monday and lowered the notes to D from CC.

The Union, N.J.-based home products retailer has been underway with strategic changes, including appointing new leadership and closing stores in mid- to late 2022.

Cooper-Standard quiet

In other distressed market supply, Cooper-Standard’s 5 5/8% senior notes due 2026 (Caa2/CCC-) were last seen trading on Tuesday at 36 bid, a source said.

The bonds were down 3 points in thin activity from where the issue ended October.

Copper-Standard’s notes traded with a 49 handle back in the summer and an 80 handle at the start of the year.

The company reported Tuesday that it entered into a support agreement with holders of about 62.7% of the 5 5/8% notes for refinancing transactions that include a concurrent notes offering, an exchange offer, a consent solicitation and a backstop agreement set to start in December.

Cooper-Standard will make an offering to the 2026 noteholders to purchase for cash $580 million of new 13½% cash pay/PIK toggle senior secured first-lien notes due 2027 and will hold an exchange offer for any and all of the $400 million of 2026 notes for new 5 5/8% cash pay/ 10 5/8% PIK toggle senior secured notes due 2027.

The Northville, Mich.-based supplier of sealing and fluid handling systems and components in June reported it had retained Goldman Sachs & Co. LLC as a financial adviser to assist in evaluating potential alternatives for refinancing its capital structure.

Rite Aid improves

Rite Aid’s 7½% senior secured notes due 2025 (B3/CC/CCC) improved 7/8 point to 73¾ bid on light secondary supply totaling more than $1 million on Wednesday, a market source said.

The notes were trading 1¾ points better this week and 3 points higher since the start of the month.

Rite Aid announced last week a cash tender offer for the issue with the early tender deadline set for 5 p.m. ET on Thursday.

The Camp Hill, Pa.-based drug retailer was downgraded in the prior week by S&P and Fitch Ratings over the distressed tender offer.

Distressed index softens

S&P U.S. High Yield Corporate Distressed Bond index one-day returns declined to 0.82% on Tuesday from 1.2% on Monday.

Month-to-date total returns for November improved on Tuesday to 0.14% versus minus 0.67% at the start of the week.

Year-to-date total returns also increased to minus 25.56%, compared to minus 26.17% on Monday.

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