StoneX Leveraged Finance Commentary - 247th Edition - 6/28/2025

June 28^th 2025

StoneX Trading Highlights and the Week Ahead – LSTA Tier 1/LMA Member

TRADING DESK COMMENTARY – NOT A RESEARCH PRODUCT

 

Middle East Intelligence Briefing — Monday, June 30 at 11:00 AM EST

Join StoneX Chief Market Strategist Kathryn Rooney Vera for an exclusive geopolitical intelligence briefing with the former Chief of Counterterrorism Operations at the CIA, Robert Dannenberg. They’ll unpack the implications of the U.S. strike on Iran’s nuclear program, the sudden Iran-Israel ceasefire, and what this means for strategic risk.  Click here to RSVP!

 

As the quarter wraps and equity markets hit record highs, Arlan Suderman, Chief Commodities Economist at StoneX, breaks down today’s major market movers — including a pivotal U.S.–China trade deal on rare earth minerals! Click here to watch!

 

TABLE OF CONTENTS

1. Loans: Century Casinos (CNTY), Aventiv (SECRUS), Michael’s Stores (MIK), Brook and Whittle (BROWHI)
2. Private Equity, Private Credit, and ReOrg: Cirque Du Soleil (CIRQUE), Audacy (CBSR), McDermott (MDR), Correct Care (CCSINT)
3. U.S. Distressed: New Fortress Energy (NFE),  Saks Global (SAGLEN), Echostar Corp (SATS)
4. U.S. High Yield: StoneX (SNEX), WASH Multifam (WASMUL), C&S Wholesale (CSWHOL), Macys (M)
5. Converts: Sarepta Therapeutics (SRPT)
6. Credit of Note: Michaels Companies (MIK)
7. EU Credit: Skechers (SKX), Thames Water (THAMES), Greene King (GNKLN), CPI Property Group (CPIPGR)
8. Macro View: Inflation and Tariffs

ATTACHMENTS

1. Century Casinos (CNTY) from Strategist Ken Smalley (212-485-3570 – kenneth.smalley@stonex.com)
2. Five Questions About the July Correction from Global Macro Strategist Vincent Deluard (415-713-5205 – vincent.deluard@stonex.com)
3. StoneX Fed Strategy: Powell Goes to Capitol Hill: Sizing Up What’s Changed in a Week from Senior Advisor Jon Hilsenrath (jon.hilsenrath@stonex.com) and Chief Market Strategist Kathryn Rooney Vera (305-913-9112 – kathryn.rooneyvera@stonex.com)
4. StoneX Strategy Round-Up Access to Recent Analyses

Data Releases	Date / Time (EST)	Survey	Actual
Existing Home Sales	Mon (6/23) 10:00am	3.95m	4.03m
Conf. Board Consumer Confidence	Tues (6/24) 10:00am	99.8	93.0
New Home Sales	Weds (6/25) 10:00am	693k	623k
GDP Annualized QoQ	Thurs (6/26) 8:30am	-0.2%	-0.5%
Personal Income	Fri (6/27) 8:30am	0.3%	-0.4%
Personal Spending	Fri (6/27) 8:30am	0.1%	-0.1%
Core PCE Price Index MoM	Fri (6/27) 8:30am	0.1%	0.2%
Core PCE Price Index YoY	Fri (6/27) 8:30am	2.6%	2.7%
U. of Mich. Sentiment	Fri (6/27) 10:00am	60.5	60.7
MNI Chicago PMI	Mon (6/30) 9:45am	42.7	--
S&P Global US Manufacturing PMI	Tues (7/1) 9:45am	52.0	--
ISM Manufacturing	Tues (7/1) 10:00am	48.8	--
ADP Employment Change	Weds (7/2) 8:15am	88k	--
Trade Balance	Thurs (7/3) 8:30am	-$70.0b	--
Change in Nonfarm Payrolls	Thurs (7/3) 8:30am	113k	--
Unemployment Rate	Thurs (7/3) 8:30am	4.3%	--
ISM Services Index	Thurs (7/3) 10:00am	50.5	--

Source: StoneX Financial Inc., Bloomberg

LevFin Gainers				LevFin Decliners				Converts Gainers				Converts Decliners
Credit	Move	Current Px		Credit	Move	Current Px		Credit	Move	Current Px		Credit	Move	Current Px
MIK 7.875 29	10.75	64.50		SAGLEN 11 29	(5.00)	34.50		INDI 3.5 29	11.75	94.38		KPTI 3 25	(20.63)	74.75
MIK 5.25 28	7.75	80.50		WTI 10.75 29	(4.50)	88.00		IREN 3.25 30	10.88	103.00		SRPT 1.25 27	(8.00)	73.75
WLSNRT 11 32	5.75	86.75		VTLE 9.75 30	(4.13)	91.00		ENVX 3 28	8.13	94.75		VERI 1.75 26	(4.63)	41.38
HTZ 5 29	5.25	69.00		SHLFDI 9.625 29	(3.25)	79.75		RUN 4 30	7.50	64.00		NBR 1.75 29	(4.38)	57.63
FBM 6 29	5.00	91.00		RIG 6.8 38	(3.00)	70.25		WOLF 1.75 26	7.38	25.50		KOS 3.125 30	(2.38)	69.25

Source: StoneX Financial Inc., Bloomberg

HY OAS – WoW	Current OAS (bps) - As of Prev. Close	Prev. Week OAS (bps)	WoW ∆ (bps)	YTW - As of Prev. Close	Prev. Week YTW	WoW ∆
HY Index {LF98TRUU Index}	293	299	(6)	7.09	7.30	(0.21)
BB {I00182US Index}	175	182	(7)	5.93	6.14	(0.21)
B {I00185US Index}	280	293	(13)	7.00	7.25	(0.26)
CCC {I00188US Index}	687	678	9	10.87	11.04	(0.18)

Source: StoneX Financial Inc., Bloomberg

1. Loans:

AXED: Allen Media (ALNMED), Anastasia (ANABEV), Aventiv (SECRUS), Auction.com /Ten-X (AUCLLC), Audacy (CBSR), CBL and Associates (CBL), Correct Care (CCSINT), CIBT Global (CIBHOL), Crash Champions (CRASHC), Elevate Textile (ITXN), Envision Healthcare (EVHC), ETC Group/Netceed (EOSUSF), Fogo de Chao (FOGO), Lakeshore Learning (LAKSHI), Loyalty Ventures (LOVEIN), Leslie Pools (LESL), Nutrisystem (KNSACQ), Parts Authority (PAIHOL), PREIT Associates (PEI), Resource Label (RESLAB), The Container Store (TCS), Tosca Services (TOSCSE), Trimark (TRIMUS), and TruGreen (SVMSTR)

US loan funds saw an inflow of $306mm vs $291mm of inflows the previous week.  The new issue market had another strong week as 10 deals priced on Thursday alone. We traded Century Casinos (CNTY) several times last week and closed as a buyer. Aventiv (SECRUS) was a top name as we traded a few blocks of the 4th out, and left us a buyer.  The desk is also a buyer of the Bridge TL. Strategist Ken Smalley covers CNTY and SECRUS for us. We were active in Michael’s Stores (MIK) before and after the company reported encouraging results.  We highlight that at first glance EBITDA was down y/y, but after adjusting for some one-off benefits in the year-ago period, EBITDA grew y/y. Strategist Ben Briggs covers MIK for us if you want to compare notes, and please see his bullet points on the name in the Credit of Note section below. Brook and Whittle (BROWHI) was a new name for the desk.  Let us know if you are involved. Lastly, we closed as a buyer of Audacy (CBSR) TL. Please show in offers.

Doug Gervolino – Loan & ReOrg Equity Trader

2. Private Equity, Private Credit, and ReOrg:

AXED: American Consolidated (ANCR), Altisource (ASPS), American Tire (ATD), Audacy (CBSR), Avaya (AVYA), Cirque Du Soleil (CIRQUE), Endo (ENDP), J Crew/Chinos (JCG), Mallinckrodt (MNK), Neiman Marcus Group (NMG), Elevate Textile (ITXN), Full Beauty (FBB), Lehman (LBHI), Men’s Warehouse (TLRD), Patagonia Holdco (PATAGO), Resolute Investments (AMEBEA), Research Now (EREWDS), and Serta Simmons (SERSIM)

We were active in Cirque Du Soleil (CIRQUE) and closed the week as a buyer. Please show offers, and reach out to Strategist Ben Briggs if you’d like to discuss. If you are looking for some supply of Audacy (CBSR), we can help. McDermott (MDR) came up several times. Let us know if you are involved.  Lastly, the desk ended the week as a seller of Correct Care (CCSINT) equity.

Doug Gervolino – Loan & ReOrg Equity Trader

3. U.S. Distressed:

AXED: Akumin (AKUCN), AMC Entertainment (AMC), Brightline East (BRIEAS), CEC Entertainment (CEC), Chesapeake (CHK), CommScope (COMM),  Cooper Standard (CPS), Eagle Internation (EAGRUY), Emergent BioSolutions (EBS), Endo (ENDP), Evergrande (EVERRE), Exela(EXLINT), First Republic (FRCB), Franchise Group (FRG), Graftech Global (EAF), Guitar Center (GTRC), Hertz (HTZ), H-Foods (HEFOSO), Intelsat (INTEL), Level 3 (LVLT), Lumen (LUMN), LEH, Ligado (NEWLSQ), Mallinckrodt (MNK), McDermott (MDR), Modivcare (MODV), New Fortress Energy (NFE), Office Property (OPI), Pyxus (PYXHLD), RealReal (REAL), Scripps(SSP), Serta (SERSIM), Signature Bank (SBNY), Spirit Airlines (SAVE), Staples (SPLS),  Telesat (TELSAT),  Unifrax (FRAX), Uniti (UNIT), Urbane One (UONE), Vericast (VERCST), Veritas (VERITS), WeWork (WEWORK), WW International (WW), Zayo (ZAYO)

 

Activity in Distressed remains focused on the same "problem" names mentioned previously. New Fortress Energy (NFE) was topical in the beginning of the week as Crowley (CWLM), a Florida-based LNG company, is in competition to replace NFE in providing LNG to Puerto Rico Utility, PREPA. Paper in the NFE cap stack was quoted 1-3pts lower on the news. Saks Global (SAGLEN) remains in focus as we approach the first coupon on the SAGLEN 11 29, scheduled for Monday, which reports out this week indicate that the company intends to make. Friday afternoon SAGLEN announced that it had reached a deal with existing lenders to supply $600MM of new money to the company in stages of a complex deal with an ad-hoc group getting materially favorable treatment. We have seen the cleansing materials and Strategist Ben Briggs is available to compare notes. The SAGLEN 11 29 Non-Coop paper printed ~2pts lower following the news, closing 32-33. On Friday morning, Echostar Corp (SATS) filed an 8k stating an intention to pay their coupon payments due earlier in the month. They also stated that they are entering the grace period on the DISH 7.75 26 and the DISH 7.375 28. Our Strategist, Rob Weaver, has looked at the situation and is available for discussion. Closing out the week the desk was in touch with buyers of Urban One (UONE) 7.375 28 and Ligado (NEWLSQ) 15.5 23. Both are printing at recent highs. Please reach out to Ben Briggs if you would like to discuss UONE, and to Ken Smalley if you would like to discuss NEWLSQ.

Doug Gervolino – Loan & ReOrg Equity Trader

Andrew Baigorria – Trading Associate

4. U.S. High Yield:

AXED: Avis Budget (CAR), CoreCivic (CXW), C&S Group (CSWHOL), Five Point Operating (FPH),  Fortrea  (FTRE), Geo Group (GEO), Jane Street Group (JANEST), Nordstrom (JWN), Kohl’s (KSS), Macys (M), Manitowoc (MTW), NCL Corp (NCLH), NGL Energy (NGL),  ReadyCap Holdings (RDYCAP), Rivian (RIVHOL), Skechers (SKX), StoneX (SNEX), Unisys (UIS), WASH Multifam (WASMUL), W&T Offshore (WTI), Telford Finco (TELFIN), Universal Entertainment (UETMF)

 

We were again on the cover of a new issue this week as our parent entity, StoneX (SNEX), came with $625mm of new 2^nd lien 6.875 ’32 (101, 6.64%, Ba3/BB-).  The proceeds are being held in escrow until the closing of our acquisition of R.J. O’Brien, anticipated in Q3 of this year, at which point the optional par redemption will be eliminated. We are able to provide 2-way liquidity in the SNEX 6.875 notes, as well as our existing SNEX 7.875 ’31 (104.875, 6.36%, Ba3/BB-). We give a big thank you to all of our clients that participated. The High Yield sector continued to grind tighter this week as yields reached a six-month low, shrugging off the attacks on Iran by both Israel and the U.S.  The focus remained on the likelihood of rate cuts after a weaker Consumer Confidence print, and a drop in new home sales.  HY OAS ended the week at +293; YTW 7.09%.  Lipper reported  a massive inflow (the 9^th straight week of positive flows) of $3.46B, the largest in 19 months.  The primary market was robust, with $8B priced, bringing nearly $33B MTD. The energy sector retreated modestly, as the $10 drop in WTI to $65 WoW took many by surprise in light of the Mideast hostilities. Energy spreads (I00459US) widened just 1bp to +315. The desk developed a number of new axes this week: Firstly, a short-dated opportunity:  1^st lien WASH Multifam (WASMUL) 5.75 ’26 (99.875, 5.90%, B3/B-).  WASMUL is a leading operator of coin-operated laundromats in the USA and Canada. In the grocery space this week, C&S Wholesale (CSWHOL) agreed to acquire SpartanNash in a $1.77B deal to expand their scale nationwide. We closed axed to offer (CSWHOL) 5 ’28 (91.25, 7.94%, Caa1/CCC+). In retail, we are axed to offer Macys (M) 6.9 ’29 (100.5, 6.74%, Ba2/BB+, 72mm o/s). At a current spread of +295, the notes are attractive, trading over +50bp cheap to the M 5.875 ’29 (99, 6.17%, Ba2/BB+, 326mm o/s) with the same 4/1/29 maturity.  With our desks in NY, London, and Asia, StoneX is equipped to provide round-the-clock liquidity.  Please reach out to inquire how our global presence can aid in successful execution of your HY axes.  

 

Adam Rosenblum – High Yield Trader

Andrew Baigorria – Trading Associate

5. Converts:

Bonds Traded This Week: ABNB 0 03/15/26, AWK 3 ⅝ 06/15/26, BABA 0 ½ 06/01/31, CDLX 1 09/15/25, CRNC 1 ½ 07/01/28, GRPN 1 ⅛ 03/15/26 GRPN 4 ⅞ 06/30/30, MKSI 1 ¼ 06/01/30, OPEN 7 05/15/30, PMT 8 ½ 06/01/29, SMCI 0 06/15/30, and XIFR 2 ½ 06/15/26.

With Sarepta Therapeutics, Inc. SRPT 1 ¼ 09/15/27 convertibles down 5 points o/r this week to 75.25 one may look closer here given ELEVIDYS (drug that caused 2 adolescent deaths) is not their only drug. Take existing cash of $632, cut it to $0, which seems draconian, but we must be conservative. Then take a 1x multiple of the existing 3 PMOS drugs (modify gene expression by acting as antisense agents (silence specific genes to better study how current drug works).  Those generated $237mm in revs for q1 ’25 which is $948mm annualized. The consensus estimated for the year for these 3 is $875mm.

875mm value for PMOS

take cash to 0.00

===

875/1.175bb = 74.5 valuation

Sarepta Therapeutics (SRPT) is down more than 80% from its 52-week high on Elevidys’ safety concerns after two adolescent patient deaths. Elevidys is Sarepta's gene therapy for Duchenne muscular dystrophy. Both deaths were linked to acute liver failure, prompting an FDA investigation into the safety of the therapy.

-         In response, Sarepta paused shipments of Elevidys for non-ambulatory patients and withdrew its revenue guidance for 2025

-         If Elevidys were no longer viable the company does have a line of phosphorodiamidate morpholino oligomer (PMO) therapies expected to generate $875mm in revenues in 2025.

Balance Sheet @ 1Q

Cash                                    $632

Debt:                                  $600mm

1L Rev               undrawn   2030 maturity, S+10+175

Cvt 1.25% 9/27              $1,150

Mkt Cap:                         $1,750

Other products:

If Elevidys (gene therapy for DMD) were withdrawn, Sarepta retains three FDA-approved PMO (phosphorodiamidate morpholino oligomer) therapies:

-         Exondys 51 (eteplirsen)

-         Vyondys 53 (golodirsen)

-         Amondys 45 (casimersen)

These generated $237 million in Q1 2025 (5% YoY growth), 39% of revenue ($611.5 million), with Elevidys contributing $375 million (61%).

  

Valuation:

-         The PMO franchise continues to show modest growth (5–9% YoY in recent quarters), and these drugs are established standards of care for certain DMD patients

Sarepta’s PMO franchise is well-established but faces payer scrutiny and limited patient population growth, a realistic sale price multiple for oncology would likely fall between 1x to 2x multiple.

Please reach out to Strategist Rob Weaver to discuss (332-227-5435 – rob.weaver@stonex.com)

6. Credit of Note:

 

Michaels Companies (MIK): Reported encouraging results this week indicating market share gains after JOANN Stores and Party City wound down

• SSS grew during the quarter, and management indicated on the call that comp store sales continued to grow in 2Q25
• While reported EBITDA was down y/y, after adjusting for a one-time benefit related to supply chain costs that impacted the year ago period, EBITDA grew y/y.
• The company burned cash during the quarter as it typically does in its first fiscal quarter of each year, but remains FCF generative on an LTM basis
• On the call, management indicated that ecommerce and new store openings should remain tailwinds during FY25, and that the company is taking advantage of assets it acquired from JOAN & Party City including IP and customer lists
• The company did however decline to quantify its exact China exposure

Please reach out to Strategist Ben Briggs to discuss (212-692-5123 – ben.briggs@stonex.com)

7. EU Credit:

European Credit markets have strengthened over the course of the week heading into the close with a very firm tone. Credit spreads are back to the tights of March with the iTraxx Crossover tightening 21bps over the week closing at around 286bps.  Overall market tone has felt balanced holistically, seeing good buying interest in short dated paper for IG/XO and we have seen a slight skew to the market being better offered in HY.  Better credit conditions have now opened a window for less creditworthy issuers that were waiting on the sidelines during weaker market conditions.  Now with investor appetite improving, this is encouraging a broader range of investors to come to market as shown by the heavy HY issuance this week.  Issuance this week has definitely been dominated by corp deals with issuers such as TCHEN, ALMAIN and SKX among a lot of others.  SKECHERS (SKX) came with a €/$ offering with the €1bn 7NC3 SS deal at Par to yield 5.25% which has seemingly performed the best amongst the other HY deals that priced this week- being the only one currently quoted above RO.  

This week the desk has been active in various names. In the middle of the week the desk traded a block of Thames Water (THAMES) and continues to have 2-way cares across the complex.  Also, the pubs space has been active with the desk trading multiple blocks of Greene King (GNKLN) B1s with continued 2-way cares in the name.  In REITS, we have been active in CPI Property Group (CPIPGR) seniors trading a block of those and are left in touch with a seller of the CPIPGR 7 29’.  Another topical name this week has been Worldline (WLNFP), reports have suggested that the French digital payment processing company has allegedly been covering up fraud by some of its customers. Today, the Brussels Public Prosecutor’s office has opened an investigation into the payment firm.  As a result, the WLNFP 5.5 30’ has been down 12 points and the whole complex continues to struggle, the desk has been active across the complex and traded the 30s and continues to have cares in the name.  We also continue to have cares across the European satellite space – Eutelsat (ETLFP) and SES (SESGFP) – so contact the desk if involved.

 

8. Macro View:

AN ALTERNATE VIEW ON INFLATION IN A TARIFF ERA: A LONG-RUN CHALLENGE WITH MUTED SHORT-RUN EFFECTS

THE GOOD NEWS:

Through May, there is no evidence in the macro data that tariffs are pushing up the national inflation rate. The Fed’s favored inflation data — the personal consumption expenditure price indexes — were released today and show this once again.

THE NOT-SO-GOOD NEWS:

Inflation remains slightly above the Federal Reserve’s 2% target. During the summer, comparisons to last year will be tough. The U.S. delivered soft inflation data last year, which means the year-over-year readings that the Fed watches will make it harder to get inflation back to 2%, even if tariff effects aren’t that large.

MY CONCLUSION:

For many months, economists have been upside down in their description of tariff effects on inflation. They describe tariffs as a one-time price shock that show up in short-term data, without long-term effects. I look at it another way. I see muted short-run effects and long-run upward pressure on consumer price levels.

The short-run effects are muted because:

A) Business has had time to prepare and buffer itself, for example by building inventories to minimize short-term effects;

B) Consumers adapt and switch spending when they see one price category go up. You get some relative price changes, costs go up in one area and down in others, but not broad price changes;

C) Tariffs get eaten elsewhere in the supply chain before reaching consumers, including corporate profit margins, and, yes, foreign suppliers. China is taking some of the bite. The evidence: China’s producer prices are going down.

Tariffs push up long-run inflation. The globalization era delivered three decades of falling inflation rates and deflation in the goods sector most affected by imports. It is logical that taxing the global supply chains that produced lower inflation in the long-run will have the opposite effect.

Today’s data fit this narrative, so I’m sticking with it. For the Federal Reserve, this means it might cut rates in the months ahead, but it doesn’t have room to cut them a lot more without stirring inflation demons. The next Fed chairman, whomever President Trump chooses, will at some point need to confront these realities. The next chairman will be in a state of constant tension between protecting his own legacy to avoid inflation and managing the president’s contradictory desires. It’s an old story in central banking that hasn’t worried Fed leaders much since the 1970s and 1980s.

From the Desk of Senior Advisor Jon Hilsenrath (jon.hilsenrath@stonex.com)