Ailing Macy’s Considers Bond Sale Amid Strong Demand for High-Yield Debt

Macy’s Inc. is sounding out investors on a potential debt sale that would further aid the retailer through the pandemic, as a string of troubled companies look to capitalize on record-low borrowing costs.

The department store chain is considering issuing new debt to bolster its liquidity, according to people with knowledge of the situation. Talks are in the early stages, and plans could change based on investor feedback, the people said, asking not to be identified discussing a private matter.

Macy’s is set to report fourth-quarter results on Tuesday. A new debt deal wouldn’t come until after the earnings release, giving the company more time to determine the exact structure of the deal, including its size and potential interest rate, the people said.

A debt sale from Macy’s would be the latest in a string of offerings from troubled companies that have found support from the high-yield market at a time of record-low funding costs. Companies hit hard by the pandemic including Party City Holdco Inc. and Carnival Corp. have raised funds with junk bond sales over the past few weeks, and others like American Airlines Group Inc. and American Tire Distributors Inc. are weighing deals of their own.

A representative for New York-based Macy’s declined to comment.

Ailing Macy’s Considers Bond Sale Amid Strong Demand for High-Yield Debt

Macy’s stock and bonds plunged last year as the pandemic took hold in the U.S. and it was forced to temporarily close stores. Government stimulus measures and gradual reopenings helped the company’s notes rally from distressed levels, and many of the securities now trade near or above par. The retailer’s shares have more than tripled from lows seen last April.

Last year, Macy’s reported slowing online sales growth, sparking investor concern about its performance during the crucial holiday season. Comparable-store sales for owned and licensed stores, a key measure of retail performance, fell 20.2% in the three months through Oct. 31. The company had about $1.6 billion of cash and equivalents on hand at the end of that quarter.

The retailer operates the Macy’s, Bloomingdale’s and Bluemercury brands and has over 770 stores in 43 states, according to its website.

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