Hasbro cuts sale amid safety fears

Pawtucket-based Hasbro Inc. cut its bond sale to $350 million after failing to find demand amid concerns about the safety of Chinese-made toys.
The 6.3 percent 10-year notes priced to yield 200 basis points more than U.S. Treasuries of similar maturity, according to data compiled by Bloomberg. The yield premium is 130 basis points more than Hasbro paid on similar debt it sold nine years ago. Hasbro had planned to sell $600 million of debt, including 30-year bonds, according to a person familiar with the offering.
Hasbro, the world’s second-largest toymaker, tapped the bond market for the first time since March 2000 as Congress announced it’s probing toy safety after rival Mattel Inc. said Chinese-made dolls and other products may contain excessive levels of lead. All of Hasbro’s toys are made in China, according to spokesman Wayne Charness.
“There’s a finite amount of resources to do the credit analysis on these deals,” said Ira Jersey, credit strategist at Credit Suisse Group in New York. “With a name like Hasbro, which investors don’t have a lot of information on, they would rather do it on a name they’re more familiar with.”
Hasbro plans to use proceeds from the sale to repay debt under its revolving credit line, the company said yesterday in a filing with the U.S. Securities and Exchange Commission.
Moody’s Investors Service assigned the notes a rating of Baa2, its second-lowest level of investment grade, and Standard & Poor’s ranked them an equivalent BBB. Bank of America Corp. and Citigroup Inc. managed the sale.
Moody’s on Sept. 5 said it lifted Hasbro’s rating one level to Baa2 because of “significant improvement’’ in the company’s credit measurements, lower operating costs and renewed focus on core brands with “good organic growth.”
S&P raised Hasbro’s ranking one notch to BBB two days later.
Hasbro last sold 10-year and 30-year corporate debt in July 1998, when it issued $300 million of bonds, according to data compiled by Bloomberg. •