I was playing around with smear mud and notice here his grip slips but he still does the kot and breaks my wrist. A bug?

<civilized none (90%hp) (100%m) (100%mv) -11465tnl- (5 AM)>
As Narram grabs at you, his grip slips a bit on your slippery mud!
Narram grabs hold of your wrist and twists it violently!
With a sickening crunch, Narram applies kotegaeshi to your wrist!
With your broken wrist, you can no longer hold onto a ranger's staff.
Narram's kotegaeshi MASSACRES you!
Narram is gushing blood.

<civilized none (77%hp) (100%m) (100%mv) -11465tnl- (5 AM)>
You dodge Narram's claw.
Narram's claw EVISCERATES you!
You dodge Narram's claw.
You dodge Narram's claw.
Your punch EVISCERATES Narram!
Your punch EVISCERATES Narram!
Narram dodges your punch.
Narram is writhing in agony.

Smear Mud reduces the severity of kote/kan, but doesn't (necessarily) result in a miss or eliminate the chance of an extra powerful attack.