Bed Bath & Beyond notes pare losses; Michaels uptrend continues; AMC Entertainment gains

By Abigail W. Adams

Portland, Me., Jan. 11 – The distressed debt space continued its strong uptrend on Wednesday with the risk-on sentiment in the market strong heading into the latest inflationary reading.

While the Thursday release of the Consumer Price Index report promises to be a high-volatility event, the market is betting on a lower-than-expected figure and a slower-than-expected pace to the Federal Reserve’s rate hike campaign.

The S&P U.S. High Yield Corporate Distressed Bond index gained another 0.65% on Wednesday, lifting year-to-date gains to 4.96%.

The index has now logged seven consecutive days of gains.

Retail remained in focus with some names in the sector riding the market’s strong uptrend while others prepare for bankruptcy.

Bed Bath & Beyond Inc.’s junk bonds continued to bounce off their lows as investors eye the recovery prospects for the notes with a bankruptcy filing widely anticipated.

However, Michaels Cos., Inc.’s 7 7/8% senior notes due 2029 (Caa1/CCC) continued to add in heavy volume on Wednesday with the retailer’s notes making strong gains since the start of the year.

AMC Entertainment Holdings, Inc.’s junk bonds also continued to benefit from the market’s renewed risk-on sentiment with the notes making strong gains on Wednesday.

Bed Bath’s recovery

Bed Bath & Beyond’s 3.749% senior notes due 2024 (C/C) continued to pare their losses from the previous week as market players eye the potential recovery of the notes in a widely expected bankruptcy filing.

The 3.749% notes gained another 2¼ points to close Wednesday at 10¼.

The notes have gained more than 4 points over the past week paring their losses from the 16-point decline the previous week.

The notes have been in focus since the company warned it was considering filing for bankruptcy protection after the failure of its attempted distressed debt exchange.

While there is little doubt a bankruptcy filing is imminent, attention has now shifted to the notes’ recovery potential, a source said.

Michaels uptrend

While retail names will be closely eyed in 2023 with market players on recession watch, Michaels’ 7 7/8% senior notes due 2029 continued to make strong gains in heavy volume.

The 7 7/8% notes rose another 1 point to close Wednesday on a 73-handle.

The notes were changing hands in the 73 to 73½ context in heavy volume, a source said.

The yield was about 14½%.

There was $15 million in reported volume.

The notes have been on a strong uptrend and added 5 points over the past two weeks.

AMC gains

AMC’s junk bonds continued to benefit from the market’s renewed risk-on sentiment with the notes making strong gains during Wednesday’s session.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CC) rose nearly 3 points to close Wednesday at 48, a source said.

The yield was 38½%.

AMC’s 5¾% senior notes due 2025 (Ca/CCC-) gained 2½ points to close Wednesday at 48½ with the yield now 41 3/8%.

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