First Republic Bank notes hit teens; QVC flat to higher; Bed Bath & Beyond bonds up

By Cristal Cody

Tupelo, Miss., April 28 – Paper from First Republic Bank again dominated distressed secondary trading with the notes down more than 10 points to a handle in the teens on Friday after sinking over much of the week.

The 4 3/8% subordinated notes due 2046 (B2/B-) plunged more than 30 points this week.

The issue was among the most active junk names traded during the session on over $15 million of secondary action, a source said.

First Republic Bank’s stock also plunged more than 40% on Friday.

The bank’s paper and equity has been on the skids since the bank reported on Monday that deposits were down more than $100 billion in the first quarter, despite an infusion of $30 billion from 11 major banks in March.

Bank failures remained on the minds of many on Friday with the Federal Reserve Board and the Federal Deposit Insurance Corp. releasing their reviews on the collapses of Silicon Valley Bank and Signature Bank in March.

The Federal Reserve said among its main takeaways from the causes of Silicon Valley Bank’s failure was that its board and management failed to manage their risks and recommended that the Fed strengthen its supervision and regulation.

The FDIC said Friday that its internal review evaluating the agency’s supervision of New York-based Signature Bank from 2017 until it was closed in March identifies the root cause of the bank’s failure as poor management and rapid growth and noted the agency could have escalated supervisory actions sooner.

The Federal Reserve meets next week with market analysts anticipating a rate hike of 25 basis points.

The week closed out mostly positive on Friday with stock indices better on the day.

The S&P 500 index finished 0.83% higher.

The iShares iBoxx High Yield Corporate Bond ETF rose 32 cents, or 0.43%, to $75.36.

The CBOE Volatility index retreated 7.52% by the close to 15.75.

In other paper, home shopping network QVC Inc.’s notes traded flat to about 1/8 point higher on more than $19 million of secondary volume on Friday.

The 4.85% senior secured notes due 2024 (B2/B-) were steady on more than $12 million of trading.

Secondary interest on Friday also turned toward bankrupt Bed Bath & Beyond Inc.’s long-dated paper with the 5.165% senior notes due 2044 (C/D) up ¼ point on more than $10 million of trading.

The retail and health care spaces are driving a higher default risk in the U.S. and Canada markets, S&P Global Ratings said in a release Friday.

The “sectors had the greatest increase in risky credits in the first quarter as well as year over year – signaling an increase in default risk for issuers in those sectors,” according to the report.

The number of corporate issuers S&P rated CCC+ and below increased to 165 in March from 161 in December 2022.

The U.S. trailing 12-month speculative-grade corporate default rate could reach 4% by December 2023, up from 2½% as of March, S&P said.

BofA Securities Inc. analysts said in a note on Friday an “8% default rate is what we have argued to be the likely peak HY default rate in a full-scale recession.”

First Republic sinks

First Republic Bank’s paper turned negative on Friday after brief gains the prior session with the paper trading in the teens by the afternoon, a source said.

The 4 3/8% subordinated notes due 2046 (B2/B-) slid 10¼ points to 16 bid on $15.25 million of secondary volume.

The notes had added 1¼ points on Thursday after giving back 7¾ points on Wednesday and 15 points on Tuesday.

First Republic Bank’s 4 5/8% subordinated notes due 2047 (B2/B-) also sank 10½ points on Friday to 15½ bid on $9 million of activity.

The issue had improved ¼ point on Thursday after declining 6½ points on Wednesday and 14 points on Tuesday.

The San Francisco-based bank’s stock plunged 43.3% on Friday to finish at $3.51, well off the $171 52-week high.

QVC mostly better

QVC’s 4.45% senior secured notes due 2025 (B2/B-/B+) rose 1/8 point to 73 7/8 bid on $6.7 million of volume on Friday, a market source said.

The 4.85% senior secured notes due 2024 (B2/B-) were unchanged at 86½ bid on $12.42 million of trading.

West Chester, Pa.-based parent Qurate Retail Inc. will release first-quarter earnings results on May 5.

Bed Bath & Beyond up

Bed Bath & Beyond’s 5.165% senior notes due 2044 (C/D) picked up ¼ point to a quote of 3¼ bid on Friday on more than $10 million of secondary trading, a source said.

The issue was last seen Wednesday in the 3 bid area on nearly $17 million of volume and has softened more than 2 points since the week opened after Bed Bath & Beyond’s Chapter 11 bankruptcy filing on Sunday.

Bed Bath & Beyond announced along with the Chapter 11 filing that it plans to liquidate all of its 360 stores and 120 buybuy Baby stores unless a buyer is found.

The bankrupt retailer’s stock fell 7.98% in heavy trading on Friday to close at 10 cents.

The Nasdaq Stock Market reported it will suspend trading in the Union, N.J.-based home products company’s stock on Wednesday.

Distressed index gains

S&P U.S. High Yield Corporate Distressed Bond index one-day returns improved Thursday to 0.18% from minus 0.18% on Wednesday and 0.01% on Tuesday but remained down from 0.43% on Monday.

Month-to-date returns rose to 2.3% on Thursday, compared to 2.13% on Wednesday and 2.21% on Tuesday. Month-to-date returns were flat in the prior session from 2.3% at the start of the week.

Year-to-date total returns were 6.93% on Thursday, 6.74% on Wednesday, 6.93% on Tuesday and 6.92% on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.