Bed Bath & Beyond ‘highly vulnerable,’ but S&P gets it out of ‘selective default’

Bed Bath & Beyond Inc. BBBY,
+23.66%
is not “actively in default” but still “highly vulnerable” at the moment, with a distressed transaction or broader restructuring “a virtual certainty based on its deteriorating liquidity position, challenging operating conditions, and the looming maturities” of some of its notes, debt ratings agency S&P Global said late Monday. S&P upped its rating on the company’s debt to CC, from “SD,” or selective default, reflecting the retailer’s vulnerability. Bed Bath & Beyond’s capital structure is “unsustainable owing to persistently weak operating performance and cash burn,” S&P said. The company’s capital structure and operating model likely are “heavily impaired” and its “excessive cash burn could lead to a liquidity shortfall, necessitating a distressed transaction or restructuring,” the agency said. “The company’s doubt regarding its ability to continue as a going concern amid current operating conditions and its current considerations include seeking bankruptcy protection support our view,” it said. Shares of Bed Bath & Beyond rose 1.9% in the extended session Monday after ending the regular trading day up nearly 24%.

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