Mattel better after earnings report; DISH higher as Sprint, T-Mobile merger approved

By James McCandless

San Antonio, July 26 – The distressed debt space ended the week focusing on names with earnings-related news.

Mattel, Inc.’s longer-term notes improved after the company released a stronger-than-expected earnings report.

Pay-TV name DISH Network Corp.’s issues moved higher as the company stands to benefit from the approved merger of wireless names Sprint and T-Mobile.

Sector peer Frontier Communications Corp.’s paper slid.

Meanwhile, Diebold Nixdorf, Inc.’s notes tapered off of a positive run in the wake of its second-quarter earnings and new financing news.

In utilities, PG&E Corp.’s issues declined a day after the company said it would pay billions into a new wildfire insurance fund.

Oil futures saw small gains, though California Resources Corp., Ensco Rowan plc and Southwestern Energy Co.’s paper diverged.

Drug maker Teva Pharmaceutical Industries Ltd.’s notes trended upward.

Mattel up

Toy name Mattel’s longer-term notes were seen improving, traders said.

The 5.45% senior notes due 2041 picked up 3½ points to close at 83½ bid. The 6.2% notes due 2040 rose 1 point to close at 86½ bid.

After the close on Thursday, the El Segundo, Calif.-based toy manufacturer released its second-quarter earnings.

The company showed a 25 cents per share loss, better than the 35 cents per share loss expected by analysts.

Revenues were higher than anticipated at $860.1 million, with much of the credit going to sales of toys from movie partnerships like Toy Story 4.

“At the end of last year the question was how they were going to adapt after Toys-R-Us folded,” a trader said. “Now they are working on a model that relies on tie-ins with the entertainment industry. There’s no telling if that’s a good long-term strategy.”

DISH higher, Frontier down

In telecom, DISH’s issues moved higher in the Friday session, market sources said.

The 2.375% senior notes due 2024 gained ½ point to close at 93½ bid.

On Friday, news broke that the Department of Justice would approve a merger between mobile network names Sprint and T-Mobile, with the Englewood, Colo.-based pay-TV provider also standing to gain.

On Wednesday, DISH struck a $5 billion deal for the company to buy prepaid mobile and spectrum assets from the two companies in a bid to make the merger more favorable to anti-trust officials.

The parties have been in negotiations for weeks over the purchase.

Norwalk, Conn.-based wireline telecom name Frontier’s paper slid lower.

The 10½% senior notes due 2022 shaved off ¾ point to close at 64¼ bid. The 11% paper due 2025 dropped ¼ point to close at 60 bid.

Diebold off

ATM maker Diebold’s notes tapered off following a positive run, traders said.

The 8½% senior notes due 2024 gave back ¾ point to close at 97¾ bid.

On Thursday, the 8½% notes picked up 5¼ points.

The North Canton, Ohio-based connected commerce solutions company released its second-quarter earnings this week, surpassing expectations.

The name showed a 6 cents per share profit and similarly surprising revenues of $1.15 billion.

Concurrently, it announced that it would extend maturities to April 2022 from December 2020 using a new revolving credit facility and a term loan.

PG&E declines

Utilities name PG&E’s issues were in decline, market sources said.

The 3.95% senior notes due 2047 fell ¾ point to close at 91¼ bid. The 6.05% notes due 2034 dipped ½ point to close at 114½ bid.

On Thursday, the San Francisco-based bankrupt electric utility committed to contribute an initial $4.8 billion to a newly established wildfire insurance fund.

Additionally, the company would contribute about $193 million annually.

The two other major utilities companies in California also pledged to contribute.

The company filed for bankruptcy at the beginning of the year after racking up billions in liability charges from 2017 and 2018 wildfire damages.

Oil diverges

Despite small gains for oil futures, distressed energy tranches diverged in trading, traders said.

Los Angeles-based independent oil and gas producer California Resources’ paper was positive.

The 6% senior notes due 2024 rose 1¼ points to close at 54¾ bid. The 8% paper due 2022 gained ½ point to close at 70 bid.

London-based contract driller Ensco Rowan’s notes traded in different directions.

The 5.2% senior notes due 2025 added 1¼ points to close at 71¾ bid. The 7¾% notes due 2026 lost 2 points to close at 73 bid.

Spring, Tex.-based sector peer Southwestern Energy’s issues saw a decline.

The 7¾% senior notes due 2027 fell ¼ point to close at 88¾ bid. The 6.2% notes due 2025 fell ¾ point to close at 86¾ bid.

West Texas Intermediate crude oil futures for September delivery picked up 18 cents to settle at $56.20 per barrel.

North Sea Brent crude oil futures for September delivery finished the week at $63.37 per barrel after a 11 cent rise.

Teva trends up

Drug maker Teva’s paper skewed positive, market sources said.

The 3.15% senior notes due 2026 gained ¾ point to close at 77 bid. The 4.1% paper due 2046 held level at 65½ bid.

Throughout the week, the Petach Tikva, Israel-based generic medicine maker has seen outward attention as its sector is increasingly scrutinized.

Mounting legal troubles in the sector related to the opioid epidemic have led to increased activity surrounding the name.

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