Bed Bath & Beyond bonds decline; Talen notes mixed after downgrade; Transocean flat

By Cristal Cody

Tupelo, Miss., April 13 – Bed Bath & Beyond Inc.’s bonds tumbled about 2¾ points to 3¼ points on Wednesday after the company reported fourth-quarter losses of $159 million following difficulty in securing inventory.

The company’s 5.165% notes due 2044 (B1/B+) are trading over 10 points lower since March.

Also in the distressed market, Talen Energy Supply LLC’s senior notes were mixed after Moody’s Investors Service downgraded the issuer and the company’s debt.

Talen’s 6½% senior notes due 2025 (C/CCC/CCC) recovered about 2¼ points after softening 3 points on Tuesday.

Market tone was stronger with volatility lower and stock indices improved across the board on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF rose 48 cents to $80.78.

May and June oil prices rallied another $3 to $4 after climbing about $6 on Tuesday.

West Texas Intermediate crude oil benchmark futures for May delivery settled up $3.65 to $104.25 a barrel.

In the distressed oil and gas space, Transocean Inc.’s paper was thinly traded over the session.

The offshore driller’s 6.8% senior notes due 2038 (C/CCC) went out mostly flat at the 63 bid area, a source said.

Bed Bath & Beyond down

Bed Bath & Beyond’s 5.165% notes due 2044 softened to the 58¾ bid range from the 61½ bid area on Tuesday, a source said.

The issue closed out March in the 71 bid range.

Bed Bath & Beyond’s 4.915% notes due 2034 (B1/B+) also declined about 3¼ points to 68¾ bid.

The notes ended March in the 79½ bid area.

Bed Bath & Beyond released fourth-quarter results on Wednesday, announcing a loss of $159 million, or $1.79 a share, for the period ended Feb. 26, compared to a profit of $9 million, or 8 cents a share, in the same quarter last year.

Sales dropped 22% to $2.05 billion in the quarter.

The Union, N.J.-based home products retailer reported an impact of about $175 million to its quarterly sales due to the lack of inventory caused by products in transit, not available for sale or held at port in the fourth quarter and early part of fiscal 2022.

Talen notes mixed

Talen’s notes were mixed over the session following a downgrade from Moody’s, a source said.

Talen’s 10½% senior notes due 2026 (C/CCC/CCC) fell ¼ point to 33¼ bid in thin trading on Wednesday.

The issue dropped 2½ points on Tuesday and is trading about 2¾ points softer this week.

Talen’s 6½% senior notes due 2025 recovered about 2¼ points in strong secondary action on Tuesday to head out at 33½ bid.

The notes fell 3 points in the prior session.

Moody’s downgraded the issuer and the company’s notes on Wednesday, reporting that “Talen’s capital structure is unsustainable as a result of its weak financial performance, very limited access to external liquidity, and severe pressure from higher natural gas prices.”

The Woodlands, Tex., and Allentown, Pa.-based power generation and infrastructure company’s senior notes dove to the low 20s in late March on reports the company is in restructuring talks.

Distressed returns

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return improved on Tuesday to minus 0.46% versus minus 0.59% on Monday.

Month-to-date total returns weakened to minus 1.71% from minus 1.25% on Monday.

Year-to-date index returns slid to minus 6.93% from minus 6.5% at the start of the week.

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