PetSmart, Mattel notes active, mixed; Community Health paper off

By Paul Deckelman

New York, Dec. 15 – Trading in distressed debt and in the bonds and notes of otherwise underperforming companies or sectors was very quiet on Friday, in line with a drying up of activity in the broader high-yield bond market.

Recently downgraded fallen angel credit Mattel Inc. priced $1 billion of eight-year notes in a regularly scheduled and much-anticipated forward calendar deal.

Traders said that the megadeal appeared too late in the session for any meaningful aftermarket activity.

However, they said that the company’s recently embattled existing notes were actively traded.

But, unlike the downside trading in that paper that took place throughout the week in the wake of the company’s recent ratings downgrades, the existing Mattel issues ended the session mixed.

Traders said that retailer PetSmart Inc.’s existing notes were once again topping the Most Actives list.

However, as had been the case with the Mattel notes, PetSmart’s paper was mixed on the day instead of being down all around, as it was earlier in the week.

Hospital operator Community Health Systems Inc.’s notes were lower by more than 1 point on the day for each issue, in busy dealings.

Existing Mattel notes mixed

Traders said the new Mattel 6¾% notes due 2025 were not initially seen trading around following the deal’s pricing, having appeared too late in the day for any meaningful aftermarket dealings.

They said, however, that El Segundo, Calif.-based toymaker Mattel’s existing notes were active on some volume.

But they said that those notes were mixed on the day, a change from their recently weaker performance across the board.

The notes had been losing ground all week after the three major ratings agencies all downgraded Mattel, pushing it squarely into junk bond from its previous investment-grade status.

A market source saw Mattel’s 3.15% notes due 2023 ending the day at 86 1/8 bid, down 3/8 point, on volume of more than $14 million.

However, its recently embattled 5.45% long bonds due 2021 jumped by 1¾ points on the session, ending at 83¼ bid, on more than $8 million traded.

On Thursday, the 3.15% notes had been down a deuce on the day, also on over $8 million of volume, while the 5.45s had swooned more than 12 points from their last previous round-lot positions last week on more than $19 million of turnover.

PetSmart pain persists

Meanwhile, traders saw PetSmart’s paper active, though mixed on the session.

The Phoenix-based pet food and other supplies retailer’s 7 1/8% notes due 2023 closed down more than ½ point at just under 58 bid, on volume of over $17 million.

Its 5 7/8% notes due 2025 ended at 74½ bid, up 3/8 point, with over $16 million of turnover.

Community Health trades off

A trader said that Community Health Systems’ 7 1/8% notes due 2020 lost 1¼ points to end at 73½, while the Franklin, Tenn.-based hospital operator’s 6 7/8% notes due 2022 retreated by 1 1/8 points, closing at 56½ bid.

More than $8 million of each series of notes changed hands.

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