Moody’s downgrades Mattel, notes

Moody's Investors Service said it downgraded Mattel, Inc.'s corporate family rating to Ba3 from Ba2 and probability of default rating to Ba3-PD from Ba2-PD.

The agency also downgraded the company’s unguaranteed unsecured notes to B2 from Ba3.

The Ba2 rating on Mattel's guaranteed senior unsecured notes is unchanged.

The speculative grade liquidity rating was downgraded to SGL-2 from SGL-1.

All ratings were placed on review for downgrade.

Moody’s said the action follows the March 15 official announcement by Toys ‘R’ Us, Inc. that it plans to close or sell all of its stores including 735 stores in the U.S. and Puerto Rico where it will liquidate inventory.

“The downgrade reflects Moody's view that the disruption in toy sales that will occur as a result of the liquidation of one of Mattel's most important retailers will be very costly,” the agency said in a news release.

“It will result in lower sales, higher write offs and slower margin improvement than had been expected if Toys ‘R’ Us, Inc. had continued operating under Chapter 11 bankruptcy.”

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