Royal Caribbean, Carnival dominate secondary; Bed Bath & Beyond up; Credit Suisse better

By Cristal Cody

Tupelo, Miss., Oct. 18 – Royal Caribbean Group’s and Carnival Corp.’s junk notes traded heavily on Tuesday following Carnival’s new $2.03 billion bond deal priced over the session.

Carnival’s paper was mixed on more than $178 million of secondary action, a source said.

The cruise line operator’s 6% notes due 2029 (B3/B) went out flat at 65½ bid and a 14.3% yield on more than $19 million of bonds changing hands.

Market tone remained upbeat with stocks extending gains to a second day.

The iShares iBoxx High Yield Corporate Bond ETF was up 51 cents, or 0.7%, to $72.90.

Market volatility also remained low Tuesday with the CBOE Volatility Index 2.77% lower at 30.50.

Bed Bath & Beyond Inc.’s senior notes traded about ½ point to 1 point higher in the teens up to a low 30s handle after the distressed retailer announced exchange offers for the bonds.

Credit Suisse Group AG’s perpetual paper rallied about 3½ points to more than 4 points over the day.

The 7¼% perpetual securities (Ba3/B+) improved nearly 4 points.

Bed Bath & Beyond up

Bed Bath & Beyond’s 4.915% senior notes due 2034 (C/CC) were quoted up about ½ point at 14 bid by Tuesday afternoon, a source said.

The 5.165% senior notes due 2044 (C/CC) traded about ½ point better in the 14 bid area.

Bed Bath & Beyond’s 3.749% senior notes due 2024 (C/CC) were moving about 1 point better with a 31 handle.

The company on Tuesday announced exchange offers for its senior notes for new second-lien and third-lien debt.

S&P said Tuesday it downgraded the retailer and the notes to CC from CCC- following the announcement and said it views the offers as distressed and tantamount to a default.

The exchange offers will provide new second- and third-lien notes to its existing noteholders at a significant discount to the par value of the existing notes, S&P said.

In September, the retailer reported steep second-quarter losses.

The Union, N.J.-based home products retailer is underway in a search for a new chief executive and new chief financial officer and strategic changes that include closing stores.

Bed Bath & Beyond’s shares finished 2.32% higher at $5.29.

Credit Suisse better

Credit Suisse’s 5¼% perpetual notes (Ba3/B+) climbed 3½ points to 71¾ bid with the issue among the company’s most active during the session on $5.56 million of volume, a source said Tuesday.

Credit Suisse’s 6 3/8% perpetual notes (Ba3/B+) jumped 4¾ points to 74¾ bid by the end of the day on $2 million of volume.

Also Tuesday, Credit Suisse’s 7¼% perpetual securities (Ba3/B+) improved nearly 4 points to 77 bid. Secondary volume totaled $1.56 million.

Credit Suisse’s credit default swap spreads recovered more than 50 basis points in the past week after widening 173 bps the week prior on restructuring chatter.

The paper has been improving since Credit Suisse International announced a cash tender offer on Oct. 7 for up to $2 billion of notes from 12 tranches of securities, as well as a tender offer for up to €1 billion of euro and sterling notes.

The Zurich-based financial services company is scheduled to post its third-quarter report on Oct. 27.

Distressed index improves

The S&P U.S. High Yield Corporate Distressed Bond index opened the week stronger with one-day returns higher at 0.58% on Monday, compared to 0.25% on Friday and the minus 0.28% to minus 0.03% range earlier in the prior week.

Month-to-date total returns improved to minus 0.07% on Monday from minus 0.64% on Friday.

Year-to-date total returns also rose Monday to minus 26.26% versus minus 26.69% ahead of the weekend.

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