Moody’s downgrades Mattel, notes

Moody's Investors Service said it downgraded Mattel, Inc.'s corporate family rating and probability of default rating to B1 and B1-PD from Ba3 and Ba3-PD, respectively.

The agency also downgraded the unguaranteed unsecured notes to B3 from B2 and guaranteed unsecured notes to Ba3 from Ba2.

The speculative grade liquidity rating was affirmed at SGL-2.

The outlook is stable. This conclude the review for downgrade initiated on March 16.

Moody’s said the downgrade reflects its view that Mattel's credit metrics will remain weak over the next 12 to 18 months as a result of lost sales due to the liquidation of Toys ‘R’ US, formerly one of Mattel's key retailers.

The agency expects that Mattel's debt/EBITDA will remain above 8. times through 2018. However, it expects that leverage will approach 5 times by the end of 2019 due to earnings growth as a result of cost savings initiatives.

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