Party City notes plummet on expected bankruptcy filing; Bed Bath & Beyond sinks further

By Abigail W. Adams

Portland, Me., Jan. 6 – The distressed debt space saw another 2023 prediction come to pass on Friday with news breaking that Party City Holdings Inc. was on the verge of a bankruptcy filing.

Party City’s 8¾% senior secured notes due 2026 (Caa3/CCC) plunged more than 10 points on the news.

Party City became the second retailer to prepare for bankruptcy in the first week of the New Year.

Bed Bath & Beyond Inc.’s junk notes continued to plummet on Friday after the retailer announced it was considering a bankruptcy filing.

Bausch Health Cos. Inc.’s junk notes, which were also identified as a default risk in 2023, were mixed in heavy volume on Friday.

While the default candidates of 2023 lived up to expectations in the first few trading sessions of the year, the broader distressed debt space was strong.

The S&P U.S. High Yield Corporate Distressed Bond index added another 0.14% on Friday and capped the week with a 1.54% gain.

Party City plummets

Party City’s 8¾% senior secured notes due 2026 plummeted on Friday after news broke the struggling retailer was preparing a bankruptcy filing.

The 8¾% notes sank almost 11 points to close the day wrapped around 21 although volume in the issue was light.

News broke on Friday that Party City is negotiating with its first-lien creditors ahead of a potential bankruptcy filing, a source said.

The company is unable to make coupon payments due in February and is negotiating with Capital Group Cos. Inc. and Silver Point Capital, two of the largest holders of its first-lien debt, ahead of a potential filing, Bloomberg reported.

The majority of Party City’s debt is first-lien with only small amounts outstanding in its guaranteed notes, a source said.

Party City was on the default watchlist of 2023 with a potential bankruptcy already priced in to the notes.

Bed Bath falls further

After plummeting on Thursday, Bed Bath & Beyond’s notes fell further in heavy volume on Friday.

The 3.749% senior notes due 2024 (C/D) sank another 6 points to close Friday at 5.5.

There was $13.5 million in reported volume.

The notes plunged 10 points on Thursday.

The 5.165% notes due 2044 sank another 1.5 points to close Friday at 4.25.

There was $7 million in reported volume.

The notes fell 4 points the previous session.

The retailer announced on Thursday that its attempted distressed debt exchange had failed and the company was considering seeking bankruptcy protection.

Bausch active

Bausch’s junk bonds were mixed in active trading on Friday with the pharmaceutical company also a front-liner on default watch lists.

While the company’s unsecured notes were flat to weaker, its secured notes added in active trade.

Bausch’s 5¼% senior notes due 2031 (Ca/CCC) were flat in heavy volume with the notes closing Friday at 50½ with a yield of 16½%, according to a market source.

The 5¼% notes due 2030 were also flat at 49 with the yield about 18½%.

The 5% notes due 2028 were about ¼ point weaker to close at 49 with a yield of 22 3/8%.

However, Bausch’s 11% first-lien secured notes due 2028 (Caa1/B-) rose about 7/8 point to close at 80¼ with a yield of about 16½%.

There was $9 million in reported volume.

The 14% second-lien secured notes due 2030 (Caa3/CCC) were wrapped around 61 with the yield 85 7/8%.

The 6 1/8% senior secured notes due 2027 gained 3 points to climb to 73 with the yield 15¼%.

Bausch issued the 11% and 14% notes in a distressed debt exchange in August.

Notes issued as part of distressed debt exchanges led defaults in 2022.

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