Bed Bath & Beyond notes slump; Ahern Rentals soft; offshore bonds mixed, Evergrande edges up

By Cristal Cody

Tupelo, Miss., July 11 – In the distressed space, Bed Bath & Beyond Inc.’s notes traded more than 1 point weaker on Monday.

The retailer’s 3.749% senior notes due 2024 (B3/B+) were down 1¾ points.

Ahern Rentals, Inc.’s 7 3/8% second-priority senior secured notes due 2023 (Caa2/C) remained quiet ahead of this week’s early tender deadline for the issue.

The session ended soft with stock indices down across the board as measured market volatility rose more than 6%. The Nasdaq closed down 2.26%.

The iShares iBoxx High Yield Corporate Bond ETF was off 0.56%, at $74.47, by the finish.

In other distressed paper, property developer Ronshine China Holdings Ltd.'s offshore bonds were not seen trading Monday after the company defaulted on two issues, a source said.

Bonds from China Evergrande Group that led the wave of defaults sparked last year in the property developer space traded up ¼ point during the session.

Country Garden Holdings Co. Ltd.’s notes were quiet but remain weak since the property developer was dropped to junk in June.

China’s property developer space has seen a wave of defaults beginning in late 2021 from issuers that include China Evergrande Group, Kaisa Group Holdings Ltd. and Fantasia Holdings Group Co. Ltd.

Bed Bath & Beyond down

Bed Bath & Beyond’s 3.749% senior notes due 2024 (B3/B+) were down 1¾ points from Friday at 30¼ bid, a source said.

The issue traded with a handle in the high 70s at the start of June.

Bed Bath & Beyond’s 5.165% senior notes due 2044 (B3/B+) also softened more than 1 point in strong trading Monday to a quote of 21 bid.

The bonds are down about 20 points from a month ago.

Bed Bath & Beyond’s paper sank in June following the company’s weak first-quarter earnings report.

The Union, N.J.-based home products retailer also reported a shake-up of senior management, including its chief executive officer.

Ahern paper quiet

Ahern Rentals’ 7 3/8% second-priority senior secured notes due 2023 (Caa2/C) were last seen in the secondary market down ¼ point at 76 bid and yielding nearly 45% on Friday, a source said.

The notes declined from trading with a handle in the 90s in May.

Ahern Rentals launched an exchange on June 30 for $550 million of the second-lien notes with the early tender offer expiring at 5 p.m. ET Thursday.

Under the tender offer, participating noteholders will receive new 8 3/8% second priority senior secured notes due 2026 that will be guaranteed by affiliate Xtreme Re-Rental LLC.

The exchange offer expires on July 28.

S&P Global Ratings downgraded the company and the notes on July 6, viewing the exchange offer as distressed and tantamount to a default.

The Las Vegas-based equipment rental company announced in September 2021 that it would not refinance the issue due to market conditions.

Offshore bonds mixed

China Evergrande Group’s 8¾% notes due 2025 rose ¼ point in strong trading Monday to 8¼ bid, a source said.

The Shenzhen, Guangdong, China-based real estate developer is expected to release a restructuring plan for its offshore debt before the end of July.

China Evergrande said in a June 27 notice that it will “vigorously” oppose a winding-up petition that was filed on June 24.

County Garden’s 5 5/8% senior notes due 2026 were last seen active in the secondary market on Friday, trading ¼ point better on the day at 50¾ bid. The bonds are down more than 3 points since June and have declined about 25 points since mid-May.

Moody’s Investors Service dropped the Hong Kong-based property developer to junk in June.

Distressed returns positive

The S&P U.S. High Yield Corporate Distressed Bond Index remained positive on Friday with one-day total returns at 0.21%, compared to 0.73% on Thursday, minus 0.11% on Wednesday and minus 0.95% at the start of the short week.

Month-to-date total returns improved to minus 0.52% from minus 0.73% on Thursday, minus 1.44% on Wednesday and minus 1.34% on Tuesday.

Year-to-date total returns rose Friday to minus 23.03% from minus 23.19% on Thursday, minus 23.74% on Wednesday and minus 23.66% at the week’s start.

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