What happened

Shares of Bed Bath and Beyond (NASDAQ:BBBY) were moving lower on Monday, after Standard & Poor's cut the company's credit rating to deep-junk levels.

As of noon EDT today, Bed Bath and Beyond's shares were down about 8.6% from Friday's closing price.

So what

In a note released on Friday afternoon, S&P cut Bed Bath and Beyond's credit rating from BB to B+, a two-notch downgrade that puts the company's debt deeply into speculative (or junk) territory.

S&P said that the home-furnishings retailer, which was already struggling with operational challenges, will face further headwinds from restrictions on retail stores as the U.S. and Canada deal with the coronavirus pandemic.

A Bed Bath and Beyond storefront.

Image source: Bed Bath and Beyond.

Specifically, S&P said that if the company's stores have to stay closed for a month or more, it'll be forced to burn a lot of cash, which will likely increase its leverage to tenuous levels by the end of its fiscal year (Feb. 28, 2021). 

As of the end of January, Bed Bath and Beyond had $1.4 billion in cash and another $250 million available in an untapped line of credit. 

The company closed most of its retail stores in the U.S. and Canada on March 23, and said that they will stay closed until at least April 3. It is paying all of its store employees for the time being.

Now what

Concerned investors won't have to wait too long for an update. Bed Bath and Beyond is scheduled to report earnings for the fourth quarter of fiscal 2019 after the market closes on April 15.