Bed Bath & Beyond bonds mostly higher; Lumen paper declines; Diamond Sports improves

By Cristal Cody

Tupelo, Miss., Feb. 8 – Bed Bath & Beyond Inc.’s bonds mostly gained on Wednesday for a third consecutive session amidst the retailer’s quickly priced and closed convertible preferred stock deal on Tuesday.

The distressed retailer’s short- and long-dated bonds were up 2 points to 3¾ points, while the 4.195% senior notes due 2034 (C/D) softened more than ½ point.

Lumen Technologies, Inc.’s paper slid about 3½ points to more than 8 points in heavy trading on Wednesday, a day after the company reported fourth-quarter and fiscal 2022 losses.

Lumen’s 5 1/8% notes due 2026 (B2/B+) declined about 5¼ points on more than $38 million of trading.

Market tone soured on Wednesday with stocks in the red. The S&P 500 index was down 1.11%.

The iShares iBoxx High Yield Corporate Bond ETF fell 32 cents, or 0.42%, to $75.85.

The CBOE Volatility index rose 5% to $19.58.

In other distressed paper, Diamond Sports Group LLC’s bonds moved up 1/8 point to ½ point.

Bed Bath & Beyond mixed

Bed Bath & Beyond’s paper mostly climbed higher on Wednesday, a source reported.

The distressed retailer’s 5.165% senior notes due 2044 (C/D) went out at 16½ bid, up nearly 2 points on $5 million of volume.

The bonds have improved more than 10 points over the last three sessions.

The company’s 3.749% senior notes due 2024 (C/D) traded up 3¾ points to 28 bid on $2.5 million of supply on Wednesday.

In the company’s heaviest traded issue, Bed Bath & Beyond’s 4.195% senior notes due 2034 (C/D) slipped more than ½ point on $8.7 million of volume over the day. The notes were quoted at a high 15 bid handle.

Before the convertible preferred stock and warrants offering was announced on Monday, the company’s paper was quoted in the single digits as a Chapter 11 bankruptcy filing looked imminent, sources reported.

Bed Bath & Beyond had missed interest payments due Feb. 1 on the company’s bonds, as well as defaulted on its senior secured credit facilities after skipping the Jan. 13 payment.

The company is expected to use availability under its credit facilities due to the preferred offering to pay the missed interest payment on its senior notes by March 3.

The Union, N.J.-based home products retailer’s stock shed another 13% to close at $2.61 after dropping nearly 50% the prior day.

Lumen notes drop

Lumen’s 5 1/8% notes due 2026 (B2/B+) saw strong secondary action with more than $38 million of bonds changing hands on Wednesday, a source said.

The notes were quoted down about 5¼ points at 78¾ bid.

Lumen’s 5 3/8% notes due 2029 (B2/B+) dropped more than 6½ points to 63½ bid on $5 million of trading during the session.

The 4½% notes due 2029 (B2/B+) also traded down more than 3 points to around 61½ bid on $12.7 million of volume.

Lumen on Tuesday reported fourth-quarter and fiscal 2022 losses.

The Denver-based telecommunications company’s stock slid 21% to $3.95 on Wednesday.

Diamond Sports trades

Elsewhere, Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa3/CCC-) traded up ½ point to 9¼ bid on $3 million of volume, a source said.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/C) also rose 1/8 point on $3 million of secondary supply on Wednesday.

The notes were quoted at 2 7/8 bid.

Diamond Sports remains on default and bankruptcy watchlists, sources report.

The Chesapeake, Va.-based sports broadcast company has a looming $140 million interest payment due in February, according to a Fitch Ratings note.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond index one-day returns rose on Tuesday to 0.63% from minus 0.69% on Monday.

Month-to-date returns improved to 1.76% versus 1.12% at the start of the week.

Quarterly and year-to-date total returns also were up at 9.89% on Tuesday from 9.2% on Monday.

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