Bed Bath & Beyond was downgraded to Ca from Caa2 by Moody’s due to a “high likelihood of a default over the next twelve months” and “governance considerations”. The American retailer is exploring a possible distressed exchange for its 3.749% 2024s which Moody’s views as an event of default. Weak demand trends weighed heavily on Bed Bath’s profitability, and while the company has taken actions to improve liquidity, it still needs to stabilize operating losses and improve working capital. The governance considerations¬†include Bed Bath’s announcement regarding the distressed exchange and the appointment of interim senior management and hiring consultants to its efforts to deliver on its operational turnaround. Bed Bath was downgraded to CCC- by S&P in September and recently reported a widening of its Q2 loss at at $366mn.

Bed Bath’s 3.749% 2024s were trading flat at 31.7 cents on the dollar.

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