Mattel, Intelsat, California Resources drop in high-volume activity

By Abigail W. Adams

Portland, Me., Oct. 26 – Distressed debt names continued to see light trading volume on Friday as volatility roiled equity markets and credit spreads continued to push out, a market source said.

However, some names were active although they were losing ground in the high-volume activity.

Mattel, Inc.’s 6¾% senior notes due 2025 (B1/BB-/BB) were again in focus and trading down in the secondary space after the toy manufacturer reported earnings.

Intelsat’s junk bonds were also losing ground in active trading with the satellite communications provider slated to report earnings next Tuesday.

California Resources Corp.’s junk bonds also dropped with crude oil futures down in intra-day trading and in the run up to the company’s third-quarter earnings report, which is scheduled for Nov. 1.

Mattel drops

Mattel’s 6¾% senior notes were in focus and losing ground after the toy manufacturer reported earnings after the market close Thursday.

The notes dropped about 1½ point to a 95 handle on Friday, a market source said.

They were seen changing hands at 95 3/8 with about $39 million of the bonds on the tape in the mid-afternoon.

The 6¾% notes have seen higher than average trading volume throughout the week, sources said.

Inter-dealer trades accounted for a large portion of the trading activity on Friday, a source said.

The notes were under pressure in the early part of the week and dropped to a 94 handle after competitor Hasbro reported earnings with declining revenue due to Toys “R” Us store closures.

However, the notes jumped 2 points to trade between 96 3/8 and 96½ Thursday afternoon after Mattel reported third-quarter earnings.

Mattel reported earnings per share of 18 cents on revenue of $1.44 billion for the third-quarter versus analyst expectations for earnings per share of 20 cents on revenue of $1.49 billion.

While an earnings miss, Mattel reported a large growth in year-over-year operating income, CNBC reported.

Intelsat loses steam

Intelsat’s junk bonds were slipping in high-volume activity on Friday in the run up to the company’s earnings report.

Intelsat Jackson SA’s 8½% senior notes due 2024 dropped below par on Friday after trending downward for much of the week.

They were seen at 99¼ bid, 99¾ offered with trades that hit the bid, sources said. More than $37 million of the bonds were in play on Friday.

The 8½% notes were at par 1/8 bid, par 5/8 offered on Thursday. The notes have trended lower throughout the week.

Intelsat Luxembourg SA’s 8 1/8% senior notes due 2023 also continued to trade down on Friday.

The notes dropped 1 5/8 point to 87, a market source said.

Intelsat is scheduled to report earnings prior to the market open Tuesday.

California Resources

California Resources 8% senior notes due 2022 were down as much as 2 points on Friday as crude oil futures slid in intra-day trading.

The 8% notes were seen at 90¾ bid, 91½ offered on Friday, according to market sources.

They were seen changing hands at 91¼ with more than $26 million of the bonds on the tape by the late afternoon.

The 8% notes were at 92½ bid, 93¼ offered on Thursday.

The price of West Texas intermediate crude oil for December delivery dropped by more than $1.13 during Friday’s session.

However, crude oil futures staged a late day recovery to settle at $67.59, an increase of 26 cents or 0.39%.

While there was previous speculation crude oil futures might cross $100, the optimism is now fading on fears of oversupply driven by increased production from Russia and OPEC countries.

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