Bed Bath & Beyond climbs on latest offer; AMC, Wesco, Team Health, Rite Aid notes up

By Cristal Cody

Tupelo, Miss., Feb. 6 – Bed Bath & Beyond Inc.’s paper saw little change ahead of the company’s announcement after the market close on Monday of a $225 million convertible preferred stock offering.

After the announcement, though, the distressed retailer’s 5.165% senior notes due 2044 (C/D) shot up 2 points in a late trade at 5:14 p.m. ET, a source said.

The bonds continued to gain headed into the early evening with the paper last seen up 5 points at 10 bid on $8.5 million of trading.

“It was at 5 [bid] earlier today,” the market source said. “The first trades were at 6 and then it traded to 5 around lunchtime and then at a 7 point.”

The notes had gone into the weekend mostly unchanged with bankruptcy chatter around the company growing after the distressed retailer skipped bond interest payments due Wednesday.

The company’s $1 billion of outstanding bonds have been trading in the low single digits.

Traders were trading the paper flat on Jan. 27 with doubt swirling then about the company's ability to pay the Feb. 1 interest payments.

“The trailing 12-month retail default rate would rise to 3.3% from 1.7% if a default occurs,” Fitch Ratings said in a note on Monday. “Bed, Bath & Beyond has been on our Top Market Concern Bonds list since July 2022.”

AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CC) perked up ½ point in strong trading that totaled more than $10 million on Monday.

AMC and Bed Bath & Beyond were the most active distressed names seen during the session.

Distressed issues were not seen as heavily traded during the session with paper from Catalent, Inc. and new junk bonds more active, according to a market source.

Wesco Aircraft Holdings Inc.’s 13 1/8% due 2027 (Ca/CCC-) traded 3 points higher on under $2 million of volume over the day.

Team Health Holdings, Inc.’s 6 3/8% senior notes due 2025 (Caa3/CCC/CCC-) also saw some secondary action with the issue up 7/8 point on $1.25 million of trading.

The week opened on a mostly soft note with stocks down across the board.

The iShares iBoxx High Yield Corporate Bond ETF gave back 49 cents, or 0.64%, to $75.90.

Measured volatility was back up. The CBOE Volatility index rose 6½% to $19.52.

“It was a down market today,” one source said.

Market focus continues this week to center heavily on earnings with almost 1,500 companies expected to post fourth-quarter results, sources report.

Some of those are coming later than normally scheduled with market participants speculating of potential surprises to the downside from companies including AvalonBay Communities, Inc., Lincoln National Corp. and PayPal Holdings, Inc., according to a Wall Street Horizon report on Monday.

In other retail paper, Rite Aid Corp. has seen gains so far in February.

The drug retailer’s 8% senior secured notes due 2026 (B3/CCC-/CCC) have picked up 4½ points in the last two weeks, while its credit default swap spreads also tightened more than 200 basis points over the past week.

Elsewhere, Adani Green Energy Ltd.’s 4 3/8% senior secured notes due 2024 (Ba3) recovered 1½ points on less than $1 million of volume on Monday.

Bed Bath & Beyond jumps

Bed Bath & Beyond’s 5.165% senior notes due 2044 (C/D) were last seen up 5 points at 10 bid on $8.5 million of trading, a source said Monday.

The issue was seen as low as around 5 bid in light midday trading action.

On Friday, the notes went out up less than ¼ point at a print of 5.40 on $3.6 million of volume.

Bed Bath & Beyond announced the offering of convertible preferred stock after the market close on Monday.

The company expects to raise proceeds of $225 million from the sale along with an additional $800 million of gross proceeds through the issuance of securities that require the holder to exercise warrants to purchase shares of series A preferred stock in future installments if certain conditions are met.

Meanwhile, interest payments on the company’s bonds were due Wednesday.

Back in 2014, the company issued $300 million of 3.749% senior notes due 2024, $300 million of 4.195% senior notes due 2034 and $900 million of the 2044 notes.

Bed Bath & Beyond reported in statements to news groups last week that it missed the interest payments on the bonds and is now in a 30-day grace period.

The company also announced a week ago that it will close 140 additional stores across the country.

Bed Bath & Beyond had announced Jan. 26 that its senior secured credit facilities were called by JPMorgan Chase Bank, NA after failing to make a payment on Jan. 13. The company said it was considering all strategic alternatives, including a restructuring.

The Union, N.J.-based home products retailer’s stock soared 92% on Monday to close at $5.86.

AMC stronger

AMC’s bonds saw some of the strongest trading action on Monday in the distressed space, a source said.

The 10% senior secured second-lien notes due 2026 (Caa3/CC) rose ½ point to 56¼ bid on more than $10 million of supply.

The notes were down 3/8 point on $6 million of trading on Friday.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) also traded more than ½ point better at 66 bid on $3 million of volume on Monday.

The notes were more than ¼ point better going into the weekend on $11.5 million of trading.

The Leawood, Kan.-based movie theater owner’s stock closed up about 12% at $6.80.

Incora paper gains

Wesco’s 13 1/8% notes due 2027 (Ca/CCC-) rallied 3 points to hit 9½ bid by the close on Monday, a source said.

Trading topped out at $1.63 million.

Wesco, acquired in 2020 by an affiliate of investment firm Platinum Equity and combined with U.K.-based aerospace and defense industry supplier Pattonair Ltd., is doing business as Incora.

The Fort Worth-based aerospace supplier’s paper saw declines in 2022 following news reports that Incora hired restructuring advisers.

Team Health up

Team Health’s 6 3/8% senior notes due 2025 (Caa3/CCC/CCC-) went out Monday at 69 5/8 bid, up 7/8 point in mostly thin trading, a source said.

Volume totaled $1.25 million.

The Knoxville, Tenn.-based medical staffing firm is owned by Blackstone Group LP.

Rite Aid higher

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/CCC) added ½ point during the session to trade at 57¼ bid, according to a market source.

The notes have picked up 4½ points in the past two weeks.

In addition, Rite Aid’s CDS spreads tightened 225 bps to a spread of 4,318 bps for the past week ended Wednesday, according to a Moody’s Investors Service report.

The Camp Hill, Pa.-based drug retailer completed two debt exchanges in 2022.

Adani improves

Adani Group’s paper reversed some of last week’s losses over the past two sessions as the India-based renewable energy company fights against fraud allegations made Jan. 24 from U.S.-based short seller Hindenburg Research.

Adani Green Energy’s 4 3/8% senior secured notes due 2024 recovered 1½ points on less than $1 million of secondary volume on Monday, a source said.

The notes were quoted at 74 bid.

The issue climbed 9 points on $8.5 million of supply on Friday after shedding 11 points on Thursday and 12¼ points on Wednesday.

Adani Green Energy’s CDS spreads moved out 1,074 bps over the past week ended Wednesday, according to a Moody’s note.

Adani Enterprises Ltd. on Wednesday pulled an equity offering that had closed in the prior session.

Distressed index lower

S&P U.S. High Yield Corporate Distressed Bond index one-day returns declined on Friday to minus 0.41% from 1.93% on Thursday, 0.3% on Wednesday, minus 0.04% on Tuesday and 0.12% at the start of the prior week.

Month-to-date returns softened on Friday to 1.82% from 2.24% on Thursday and 0.3% on Wednesday.

Quarterly- and year-to-date total returns fell to 9.96% on Friday from 10.41% on Thursday, 8.32% on Wednesday, 7.99% on Tuesday and 8.03% in the week’s first session.

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