Bob’s Discount Furniture better with ratings upgrades; Pure Fishing unchanged on downgrades

By Sara Rosenberg

New York, April 11 – In the secondary market on Tuesday, Bob’s Discount Furniture’s (BDF Acquisition Corp.) term loan B headed higher as the company’s corporate family and senior secured ratings were upgraded by Moody’s Investors Service.

On the other hand, Pure Fishing’s first-lien term loan held steady following corporate family and senior secured ratings downgrades by Moody’s.

Bob’s strengthens

Bob’s Discount Furniture’s 2026 term loan moved up to 98 bid, par offered on Tuesday from 96¼ bid, 97¾ offered on Monday after the company’s corporate family rating was lifted by Moody’s to B3 from Caa1 and its senior secured first-lien term loan rating was raised to B2 from Caa1, according to a trader. The outlook is stable.

Moody’s said that the upgrades reflect governance considerations including the full repayment of the company’s 2023 term loan with balance sheet cash. The company’s next debt maturity will be the $150 million ABL, which expires the earlier of May 2026 or 180 days before the term loan maturity, which is February 2026.

The upgrades also reflect improvements in Bob’s operating performance and Moody’s expectation that the company will maintain appropriate credit metrics and liquidity for the B3 rating category despite macroeconomic weakness and volatility of consumer demand, particularly in the home and furniture category, the rating release added.

Bob’s Discount is a Manchester, Conn.-based furniture retailer.

Pure Fishing flat

Pure Fishing’s first-lien term loan shrugged off news of ratings downgrades by Moody’s Investors Service, with one trader quoting the debt at 60 bid, 64 offered and another trader quoting it at 62 bid, 65 offered, and both traders saying levels were unchanged on the day.

Moody’s cut the company’s corporate family rating and senior secured first lien term loan rating to Caa2 from Caa1. The outlook is negative.

The downgrade and outlook “reflects Pure Fishing’s unsustainable capital structure and the elevated risk of default over the next 12-18 months given its very high financial leverage,” said Oliver Alcantara, AVP-Analyst at Moody’s, in the ratings release.

“We expect that demand and industry headwinds will persist in 2023 and the company has limited financial flexibility to absorb prolonged revenue pressures given its constrained liquidity,” Alcantara added.

According to Moody’s, for the fiscal year period ending Dec. 31, the company’s debt/EBITDA was around 18.6x.

Pure Fishing is a Columbia, S.C.-based designer, marketer and wholesaler of fishing equipment including rods, reels, combos, line and bait.

Secondary unchanged

The secondary market in general on Tuesday was pretty much unchanged, a trader told Prospect News, explaining that discounted names were maybe a touch better on the day and there may have been a little bit of selling in some high dollar names.

“Same of what we’ve been seeing over the past couple of days,” the trader added.

Fund flows

In other news, actively managed loan fund flows on Monday were negative $124 million and loan ETFs were positive $20 million, market sources said.

Outflows for loan funds week-to-date total an estimated $166 million, compared to outflows in the prior week of $592 million, sources added.

Loan indices rise

In other news, IHS Markit’s iBoxx loan indices were higher on Monday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.06% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.07%.

Month to date, the MiLLi is up 0.38% and year to date it is up 3.45%, and the LLLi is up 0.39% month to date and up 3.7% year to date.

Average secondary market bids in the U.S. on Monday were 91.5, up 0.10% from the previous day and down 0.41% year to date.

According to the IHS Markit data, some of the top advancers on Monday were TKC Holdings’ May 2021 term loan at 86.5, up from 84.48, ADS Tactical’s March 2021 covenant-lite term loan B at 93, up from 91.75, and Audio Visual Services’ February 2018 second-lien covenant-lite term loan at 88.75, up from 87.6.

Some top decliners on Monday were Mitel Networks’ November 2018 covenant-lite fourth out no roll-up term loan at 23.25, down from 24.6, Cyxtera’s May 2017 covenant-lite term loan at 77.17, down from 80.64, and LogMeIn’s August 2020 covenant-lite term loan B at 56.88, down from 58.

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