Distressed retail paper mostly soft; Bed Bath & Beyond, Staples, Michaels, Rite Aid off

By Cristal Cody

Tupelo, Miss., April 27 – Retail paper treading in distressed waters remained mostly weak on Wednesday as stock indices ended little changed and market volatility remained high.

Bed Bath & Beyond Inc.’s 5.165% senior notes due 2044 (B2/B+) have sunk over 10 points to a high 50s handle in April.

The issue was down ½ point during the session.

Volatility was slightly lower on the day after climbing over 24% on Tuesday.

The Chicago Board Options Exchange’s CBOE Volatility index was down 5.07% at 31.82 by the day’s close.

The iShares iBoxx High Yield Corporate Bond ETF traded down 39 cents to $79.07.

Office supplies retailer Staples Inc.’s 10¾% senior notes due 2027 slipped about ½ point in thin trading over the day.

Arts and crafts retailer Michaels Cos., Inc.’s 7 7/8% senior notes due 2029 traded off ¼ point in light secondary action.

Drugstore chain Rite Aid Corp.’s notes also remain mostly soft since the company reported heavy fourth-quarter losses earlier in April.

Bed Bath & Beyond off

Bed Bath & Beyond’s 5.165% senior notes due 2044 (B2/B+) continued to edge lower with steady trading seen in the issue this week, a source said.

The 5.165% notes were down 1 point on Monday, recovered the point on Tuesday and slipped ½ point on Wednesday to 57½ bid.

The notes have dropped from 71 bid at the start of April.

Bed Bath & Beyond’s 4.915% notes due 2034 (B2/B+) also were quoted about 1½ points weaker in lighter trading at 70¾ bid.

The company’s paper has been active following a news report that Bed Bath & Beyond is entertaining offers to buy its buybuy Baby Inc. unit.

The Union, N.J.-based home products retailer earlier in April reported fourth-quarter losses following difficulty in securing inventory.

Staples trades lower

Staples’ 10¾% senior notes due 2027 (Caa2/CCC+) fell about ½ point in thin trading over the session and were last seen at the 89½ bid area, a source said on Wednesday.

The notes were yielding 13.73%.

The Framingham, Mass.-based office supply chain’s paper was unchanged to about ½ point higher on the month.

Michaels slips

Michaels’ 7 7/8% senior notes due 2029 (B3/CCC+) fell ¼ point to 79¾ bid in light trading action on Wednesday, a source said.

The bonds are ending the month about 5 points lower.

The Irving, Tex.-based arts and crafts retailer was taken private a year ago by funds managed by Apollo Global Management, Inc. affiliates following a cash tender offer for Michaels’ stock in April 2021.

Rite Aid down

Rite Aid’s 7.7% senior debentures due 2027 (Caa2/CCC/CCC) were trading mainly in the 70 to 71 bid range over the session, a source said.

The drug retailer’s notes are down about 5 points since the start of the month but have improved from the 68 bid range in mid-April following a weak analyst report and a reported fourth-quarter loss.

The Camp Hill, Pa.-based company’s 8% senior secured notes due 2026 (B3/CCC/BB-) were quoted about 1 point lower from Friday at 85 bid on Wednesday.

Distressed returns higher

S&P U.S. High Yield Corporate Distressed Bond index returns improved on Tuesday.

One-day total returns rose to 0.14% from minus 0.52% on Monday.

Month-to-date total returns were better at minus 1.85% versus minus 2% at the week’s start.

Year-to-date index returns rose to minus 7.07% from minus 7.21% on Monday.

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