Avaya bonds decline; Bed Bath & Beyond notes edge higher; Lumen paper under pressure

By Cristal Cody

Tupelo, Miss., Feb. 15 – Paper from newly bankrupt Avaya Holdings Corp. traded down in mostly light secondary action on Wednesday following the company’s Chapter 11 filing on Tuesday.

Avaya Inc.’s 6 1/8% senior secured notes due 2028 (Caa2/CCC-/CCC) fell 3 points.

Bed Bath & Beyond Inc.’s bonds saw some of the heaviest distressed trading over the day, a source said.

Bed Bath & Beyond’s 5.165% senior notes due 2044 (C/D) went out up ¼ point on nearly $10 million of volume.

Market tone mostly held in Wednesday with stock indices higher and volatility lower.

The iShares iBoxx High Yield Corporate Bond ETF softened 12 cents to $74.87.

The CBOE Volatility index moved off 3.23% to $18.30.

Lumen Technologies, Inc.’s bonds remained under pressure.

The 4½% notes due 2029 (B2/B+) traded down 1 5/8 points on more than $7 million of paper changing hands.

Meanwhile, Diamond Sports Group LLC’s notes stayed mostly quiet after the company reported it missed $140 million of interest payments due Wednesday on three tranches of notes and had entered into a 30-day default grace period.

The company’s bonds were not seen among the most active names traded during the session, a source said.

The 5 3/8% senior secured notes due 2026 (Caa3/D) were quoted Tuesday trading at 10 3/8 bid on $5.5 million of volume.

S&P Global Ratings downgraded the bonds to D on Wednesday.

The Chesapeake, Va.-based owner of the Bally Sports Regional Sports Networks said Wednesday in a statement it intends to use the grace period for ongoing discussions with creditors and stakeholders regarding potential strategic alternatives.

Avaya down after filing

Avaya’s 6 1/8% senior secured notes due 2028 (Ca/D/CC) fell 3 points to head out at 27 bid on Wednesday, a day after filing for Chapter 11 bankruptcy, a source reported.

Trading supply totaled $3.7 million.

Moody’s Investors Service and S&P downgraded the notes during the session.

The issue declined in December to a mid-30s handle after the company disclosed discussions with holders of its convertible senior notes and term loans.

Avaya had reported that holders were not supportive of an out-of-court transaction.

The Durham, N.C.-based technology company on Tuesday reported it filed Chapter 11 and had entered into a restructuring that will reduce its debt to about $800 million from $3.4 billion.

Bed Bath & Beyond up

Bed Bath & Beyond’s 5.165% senior notes due 2044 (C/D) went out up ¼ point at 11½ bid in strong trading volume on Wednesday, a source said.

The issue attracted $9.6 million of volume.

The distressed retailer’s notes have declined about 1¼ points since the start of the week.

Bed Bath & Beyond completed a convertible preferred stock and warrants offering in the prior week, gaining approximately $225 million in proceeds.

The Union, N.J.-based home products retailer is expected to use new availability under its credit facilities following the preferred offering to pay a missed interest payment on its senior notes by March 3.

Lumen notes soften

Lumen’s bonds moved down more than 1 point in active trading on Wednesday, a source said.

The 4½% notes due 2029 (B2/B+) traded off 1 5/8 points to 54 3/8 bid on $7.4 million of paper changing hands.

The issue was flat on Tuesday on more than $4 million of secondary action.

Lumen’s 5 3/8% notes due 2029 (B2/B) declined to the 57 bid area, down more than 1¼ points on Wednesday on light trading totaling $1 million.

On Tuesday, the issue dropped 2 points on $4.2 million of notes traded.

The Denver-based telecommunications company reported fourth-quarter and fiscal 2022 losses in the prior week.

Distressed returns higher

S&P U.S. High Yield Corporate Distressed Bond index one-day returns improved on Tuesday to 0.13% from 0.03% on Monday.

Month-to-date returns rose to 0.57% from 0.44% on Monday.

Quarterly and year-to-date total returns were higher on Tuesday at 8.6% versus 8.46% at the start of the week.

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