DISTRESS WATCH: Staples Bonds Boomerang After Refinancing Deal

A $4 billion debt overhaul that Staples completed in May helped the Sycamore Partners-owned company stretch out its maturities and trim its borrowings. But it’s starting to sting for bondholders.

The riskiest slice of the US office supply firm’s new debt — $826 million of third-lien bonds due in 2030 and issued as part of a debt exchange — fell into distressed territory last week after the company reported weaker-than-expected first-quarter results. Higher-ranked pieces of the company’s $5 billion debt stack have also traded down in the secondary market.

“The company’s outlook for 2Q fell short of what was implied ...