BBBY stock (NASDAQ:BBBY) debt has been downgraded to the lowest rung on Moody’s ratings ladder. Few people believe in the home improvement store.
What Occurred?
BBBY stock (NASDAQ:BBBY) was down 3.7% on Monday at 11:49 a.m. ET after a further downgrading of the home goods retailer’s debt into the junk category.
Moody’s downgraded the retailer’s debt from Caa3 to C, the lowest possible rating from the agency, indicating a “very high chance of a default over the next twelve months.”
So, What’s the Deal?
Bed Bath & Beyond is struggling to turn around its company. The firm was already in trouble before the epidemic, and liquidating its public retail locations drove it closer to bankruptcy.
Bondholders have the same level of trust in the store as the rating agency. They just started circling the wagons last week to defend themselves from a possible debt restructuring.
The home goods store was apparently looking into a distressed debt swap, which would exchange the business’s existing bonds for new, longer-term debt or stock in the company. Existing debtholders are concerned that if Bed Bath & Beyond (NASDAQ:BBBY) takes on more debt, their claims on the company’s assets may be undermined.
What’s Next for BBBY Stock?
BBBY stock (NASDAQ:BBBY) was previously labeled junk, so the shift isn’t remarkable, but there’s a growing agreement that the shop isn’t long for this world.
Net sales fell 28% year on year in the second quarter, while comparable sales fell 26%. What was once a dependable machine, producing $1 billion or more in free cash flow per year, has degraded into a cash-burning machine.
An analyst urged earlier this summer that Bed Bath & Beyond “continue to seriously contemplate ‘endgame’ possibilities,” and Moody’s seems to concur.
Featured Image- Megapixl @ Georgesheldon
Author Okoro Chinedu 
