First Republic Bank extends slide; bankrupt Bed Bath & Beyond lower; AMC secured paper flat

By Cristal Cody

Tupelo, Miss., April 26 – Market focus remained on the financial space with First Republic Bank notes down more than 6 points in heavy secondary trading Wednesday following a drop of 14 points to 15 points the previous session.

First Republic Bank’s 4 3/8% subordinated notes due 2046 (B2/B-) declined 7¾ points on more than $23 million of volume.

The paper was down 15 points on Tuesday.

First Republic Bank’s stock plunged nearly 50% on Tuesday and slid about 30% more on Wednesday.

Concerns were growing the distressed bank may fail or become the subject of a takeover after it posted a shortfall in first-quarter earnings and deposits, market sources said.

Other banks are taking notice. First Resource Bancorp, Inc. on Wednesday announced its first-quarter results and touted that “deposits grew 8% and loans grew 5%” in the quarter.

Pacific West Bancorp reported Wednesday that first-quarter “total deposit balance decreased by 5% quarter-over-quarter but increased by 4% year-over-year.”

First US Bancshares, Inc. announced over the day that in its first quarter, deposits climbed to $897.9 million from $870 million in the fourth quarter and from $853.12 million in the first quarter of 2022.

“Growth in deposits during the quarter resulted from wholesale brokered deposit sources utilized by the company to increase liquidity on the company's balance sheet in the wake of bank failures that occurred during March,” the bank said. “During the quarter, the company acquired brokered deposits totaling $35 million.”

Bed Bath & Beyond Inc. also grabbed a large share of distressed secondary market action Wednesday with the bankrupt retailer’s 5.165% notes due 2044 (C/D) off more than ½ point on nearly $17 million of trading.

AMC Entertainment Holdings, Inc.’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) attracted secondary interest Wednesday but the notes went out flat on nearly $10 million of trading.

Tuesday was weak across the high-grade and junk markets, sources reported, with tone only slightly better on Wednesday.

The S&P 500 index, which dropped 1.58% in the prior session, closed the day down 0.38%.

The iShares iBoxx High Yield Corporate Bond ETF declined 29 cents, or 0.39%, to $74.79.

The CBOE Volatility Index also rose 1.71% Wednesday after increasing more than 12% on Tuesday. The index went out at 19.08.

First Republic continues decline

First Republic Bank notes moved lower Wednesday following losses of about 14 points to 15 points in Tuesday’s secondary action, a source said.

The 4 3/8% subordinated notes due 2046 (B2/B-) fell 7¾ points to 24¾ bid by the close on $23.76 million of trading.

The issue was quoted down 15 points at 34 bid on Tuesday.

First Republic Bank’s 4 5/8% subordinated notes due 2047 (B2/B-) went out Wednesday 6½ points lower at 26 bid on $9.3 million of volume.

The issue shed 14 points the previous day to a quote of 39 bid on $4.5 million of trading.

The bank reported Monday that firstquarter income fell 32.9%, while deposits dropped 35.5% to $104.47 million.

First Republic Bank was infused with $30 billion of deposits from 11 major banks in March to help shore up the bank.

The San Francisco-based bank’s stock, which sank 49.37% on Tuesday, closed Wednesday down 29¾% at $5.69.

Bed Bath & Beyond active

Bed Bath & Beyond’s 5.165% senior notes due 2044 (C/D) saw strong trading action Wednesday with $16.91 million of bonds changing hands, a source said.

The notes went out in the 3 bid area and sporting a yield of more than 119%.

The issue was quoted Monday 1½ points softer at 4 bid on $7.41 million of trading in the first session after the company’s Sunday Chapter 11 bankruptcy filing.

Bed Bath & Beyond’s stock went out Wednesday down 43.8% at 11 cents.

On Tuesday, the retailer said the Nasdaq stock market reported it will suspend trading in the company’s stock on May 3.

Bed Bath & Beyond announced Sunday that it filed for Chapter 11 bankruptcy and has started a liquidation sale to close all of its 360 stores and 120 Buy Buy Baby stores unless a buyer is found.

The company also said Tuesday it has canceled a May 9 special shareholders meeting previously scheduled for a reverse stock split vote.

The Union, N.J.-based home products retailer tried numerous attempts this year to stave off bankruptcy, including the issuance of preferred stock warrants.

AMC secureds unchanged

AMC Entertainment’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) attracted secondary interest Wednesday but the notes went out flat at 71½ bid, a source said.

Trading totaled $9.93 million.

AMC will report first-quarter earnings results on May 5.

The Leawood, Kan.-based movie theater owner had an April 27 court hearing set over a lawsuit from Allegheny County Employees’ Retirement System in the Delaware Court of Chancery regarding the issuance of preferred equity but reached a settlement earlier this month.

The company is awaiting court approval.

AMC’s equity rose 4 cents, or 0.78%, to $5.19, while its preferred shares fell 2.11% to $1.39.

Distressed index down

The S&P U.S. High Yield Corporate Distressed Bond index declined in the poor market tone Tuesday to 0.01% from 0.43% on Monday.

Month-to-date returns slipped to 2.21% from 2.3% at the start of the week.

Year-to-date total returns edged up to 6.93% on Tuesday from 6.92% on Monday.

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