Bed Bath & Beyond credit rating downgraded further into junk territory by S&P Global Ratings

S&P Global Ratings downgraded Bed Bath & Beyond’s credit rating further into junk territory on Monday, and said the outlook is negative, meaning it could downgrade again in the near term. The agency cut its rating to CCC from B-minus as the retailer faces growing challenges, including poor sales, shrinking liquidity and looming debt maturities. “We believe macro conditions are worsening and prospects for home goods sales continue to deteriorate,” the agency said. “Other retailers have indicated a significant, rapid decline in discretionary purchases across retail, and we believe BBBY will remain susceptible to further declines.” The negative outlook “reflects the risk the company could default on its debt or pursue a restructuring in the coming 12 months if its turn-around efforts do not gain significant traction,” said S&P. “The company has burned cash but retains access to its ABL, and we believe, with low trading prices on its unsecured notes, there is the potential for below par retirement of its notes, which we would likely consider a distressed exchange.” Bed Bath & Beyond shares were down 3.4% and have fallen 27% in the year to date, while the S&P 500 SPX, -1.76% has fallen 11%.