Bed Bath & Beyond stock (NASDAQ:BBBY) was pulled down again a day after shares jumped on reports of a debt-exchange deal. An important credit rating agency does not like the sound of that offer and has downgraded the retailer’s creditworthiness as a result. As a consequence, the stock dropped by more than 5%.
Market Analysis of Bed Bath & Beyond Stock
S&P Global, the ever-powerful rating agency, was the cause, lowering its estimate for Bed Bath & Beyond stock (NASDAQ:BBBY) to CC with a negative outlook. That’s one notch below S&P’s previous CCC, which was reduced as recently as late August.
CC is a “speculative grade,” meaning that a company’s debt is “very fragile; default has not yet happened, but is considered to be a near inevitability,” according to S&P’s ratings guide. Even for a long-shot company like Bed Bath & Beyond stock (NASDAQ:BBBY), that’s frightening.
The action comes only one day after the ailing retailer made a debt-swap offer to a handful of its bondholders. It is specifically issuing interest-bearing notes to replace existing debt securities maturing in 2024. The offered notes would mature in 2027, giving the firm additional time to get its finances in order; impacted bondholders have until November 15 to approve the exchange.
So, what now?
Given the company’s difficulties in recent months and years, Bed Bath & Beyond stock (NASDAQ:BBBY) investors are a tough lot. Even the most forgiving shareholder must be concerned by a second rating downgrading in as many months. We’ll see how many people sign up for the company’s debt exchange, but its finances aren’t looking good right now.
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Author Okoro Chinedu 
