StoneX Leveraged Finance Commentary - 4/12/2025

April 12^th 2025

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

TRADING DESK COMMENTARY – NOT A RESEARCH PRODUCT

STONEX SPEAKER SERIES:   Join us May 2^nd at 11:00am EST for a high-level virtual discussion featuring top thought leaders on the US economic outlook, market strategy and investment positioning. Kathryn Rooney Vera, Chief Market Strategist at StoneX Group, Shannon Saccocia, Chief Investment Officer at Neuberger Berman Private Wealth, and Gregory Daco, Chief Economist at EY-Parthenon will share real-time insights and actionable perspectives to help institutional investors navigate today’s rapidly evolving environment. Click here to register!

TABLE OF CONTENTS

1. Loans: Aventiv (SECRUS), Viapath (GLOLIN), TruGreen (SVMSTR), Cornerstone (CNR)
2. Private Equity, Private Credit, and ReOrg: Republic Airlines (RJET), Spirit Airlines (SAVE), Tailored Brands (TLRD), Cirque Du Soleil (CIRQUE)
3. U.S. Distressed: Spirit Airlines (SAVE), Urban One (UONE), Emergent BioSolutions (EBS), New Fortress Energy (NFE)
4. U.S. High Yield: NGL Energy Partners (NGL)
5. EU Credit: Transurban Finance Co (TCLAU), BayWa (BYWGR), Tullow Oil (TLWLN), Pierer Mobility AG (KTMG/PIERER)
6. Emerging Markets: Argentina, Venezuela
7. Asia Credit: Alibaba (BABA), Tencent (TENCNT), Lenovo (LENOVO), Korea Gas (KORGAS)

ATTACHMENTS

1. Spirit Airlines (SAVE) from Strategist Ben Briggs (212-692-5123 – [email protected])
2. Urban One (UONE) from Strategist Ben Briggs (212-692-5123 – [email protected])
3. Why So Mean? Smart Rationales for Asinine Tariffs from Global Macro Strategist Vincent Deluard (415-713-5205 – [email protected])
4. Tariffs, Recession, and Market Positioning from Chief Market Strategist Kathryn Rooney Vera (305-913-9112 – [email protected])

Source: StoneX Financial Inc., Bloomberg

Source: StoneX Financial Inc., Bloomberg

Source: StoneX Financial Inc., Bloomberg

1. Loans:

AXED: Allen Media (ALNMED), Audacy (CBSR), Barracuda (CUDA), CBL and Associates (CBL), Correct Care (CCSINT), CIBT Global (CIBHOL), Elevate Textile (ITXN), ETC Group/Netceed (EOSUSF), Loparex (LOPARX), Loyalty Ventures (LOVEIN), Leslie Pools (LESL), PREIT Associates (PEI), Quorum Health (QHC), RugsUSA (RUGSUSA), Sonicwall (SONUSH), Surgery Partners (SURCEN), Thryv (DXMMQ), Tosca Services (TOSCSE), Trimark (TRIMUS), Tropicana (NAKEJUI) and TruGreen (SVMSTR)

US loan funds saw a record outflow of $6.5bn vs. $386mm the previous week. The markets had a wild ride, and loans were no different. The primary markets continued to be shut, putting all focus on secondary trading. We have a few interesting opportunities in the REIT space.  Please reach out to your sales coverage for more details.  Aventiv (SECRUS) was a top name again as updated documents were circulated, and the advisors hosted a call. We closed as a seller.  The desk is also in touch with a seller of Viapath (GLOLIN). TruGreen (SVMSTR) was a focus name as the 2L closed in the high 70s.  We can be 2-sided.  Briggs covers SVMSTR for us. Cornerstone (CNR) came up several times, and the desk is developing supply.  Lastly, the desk closed axed in Torrid (CURV) and Holley (HLLY).

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)

The most active sector last week was Airlines starting with Republic Airlines (RJET); we are looking for supply. Spirit Airlines (SAVE) had another volatile week and closed in the $11-13 context.  The desk closed as a seller. The Tailored Brands (TLRD) bid was lower on the week. Let us know if you need liquidity.  We are also looking for a Cirque Du Soleil (CIRQUE) offer. Strategist Ben Briggs covers SAVE and CIRQUE here. Lastly, the desk closed as a buyer of Loyalty Ventures (LOVEIN) stubs.

Doug Gervolino – Loan & ReOrg Equity Trader

3. U.S. Distressed:

AXED:  Cooper Standard (CPS), Emergent BioSolutions (EBS), Endo (ENDP), Guitar Center (GTRC), Hertz (HTZ), Ligado (NEWLSQ), New Fortress Energy (NFE), Office Property (OPI), Pyxus (PYXHLD), Scripps(SSP), Spirit Airlines (SAVE), Urban One (UONE)

As volatility continues in global markets, the amount of US distressed debt continues to swell. Since Jan 31st, the notional amount of US distressed debt has risen +35% from $135B to $182B(per Bloomberg). We continue to follow the ongoing situation in Spirit Airlines (SAVE); we had a teach-in this week on the credit and have an updated tearsheet available. Please see the tearsheet attached & reach out to Ben Briggs if you would like to compare notes. We noted in the tearsheet that SAVE is experiencing both secular declines and an ongoing cash burn that creates further headwinds for the company.  The SAVE 11 30 (80, 18.17%, Caa1/B-) notes closed the week 80-81, down over 15pts from their emergence in March. The JETS ETF, which is down 26% YTD, further highlights weakness in the airline industry. Another name that Ben Briggs follows closely is Urban One (UONE), and we closed the week in touch with both sides. The UONE 7.375 28 (50, 37.79%, Caa2/CCC+) closed the week in the 49.5-50.5 context. On Friday, Moody's downgraded UONE to Caa2 on operating performance falling short of expectations due headwinds in the TV and radio divisions. See Briggs updated tearsheet attached to this email. Emergent BioSolutions (EBS), remains topical with the EBS 3.875 28 (62.5, 19.75%, Caa1/CCC+) closing the week in the 62-63 context. Now yielding ~19.75%, Strategist Ken Smalley remains positive on the name at these lower levels, citing their NARCAN and Medical Counter Measures (MCMs) segments as providing ample coverage on the debt. Please reach out if you would like to compare notes. Finally, we were axed and traded paper in the New Fortress Energy (NFE) cap stack, specifically the NFE 8.75 29 (50.25, 31.81%, Caa2/B-), which now trade firmly at distressed levels.

Doug Gervolino – Loan & ReOrg Equity Trader

Andrew Baigorria – Trading Associate

4. U.S. High Yield:

AXED: CoreCivic (CXW), Geo Group (GEO), Jane Street Group (JANEST), Nordstrom (JWN), Kohl’s (KSS), Manitowoc (MTW), NGL Energy (NGL), EnPro Industries (NPO), Newell Brands (NWL), Organon (OGN), Oceaneering International (OII), StoneX (SNEX), W&T Offshore (WTI), C&S Group (CSWHOL), Land O' Lakes (LLAKES), MGM China Holdings (MGMCHI), Saks Global (SAKSGL), Telford Finco (TELFIN), Universal Entertainment (UETMF)

Intra-week volatility in the High Yield sector rose to levels we haven’t seen since the Covid era.  Spreads opened the week at +427, widened +26bp to +453, and finally closed the week at +434. Week over week spreads closed +7bps wider; YTW rose +32bps to 8.62% marking the 3rd consecutive week of losses. Lipper reported that High Yield had a massive outflow of $9.63B  (the largest in 20 years) vs $271mm inflow for the week ending  Wednesday.  Primary issuance ground to a halt, with MTD issuance at just $1B.  As expected, we have seen a significant retreat in the CCC ratings bucket.  For the first 11 days of the month of April, CCC spreads have widened +167bps to +843, now approaching 13% YTW. BB yields widened 38bp to +288, a 16 month high. The desk was active this week with multiple trades in our bond issue StoneX (SNEX) 7.875 ’31 (102.375, 7.16%,+300bp,  Ba3/BB-).  Energy related issues were under pressure this week; our Strategist Ken Smalley remains constructive on NGL Energy Partners (NGL) secured 8.125 ’29  (91.5, 10.86%, B2/B+) and NGL secured 8.375 ’32 (90.25, 10.38%, B2/B+).  NGL’s water solutions business represents over 81% of their LTM EBITDA, with long term contracts in place. Please reach out to Ken for more details on this opportunity.

Adam Rosenblum – High Yield Trader

Andrew Baigorria – Trading Associate

5. EU Credit:

European credit markets experienced the headwinds of the broader markets and followed a very risk off tone.  Spreads on the iTraxx Crossover reached highs of 428bps and closed around 395bps Friday.  Data from the UK today suggested that Britain’s economy posted the strongest growth in almost a year as the economy grew 0.5% in February; however, the growth was partially driven by manufacturers ramping up production ahead of US tariffs.  Short-end Bunds and Gilts briefly rallied as recessionary concerns resurfaced across Europe. Initial optimism following the 90-day pause on U.S. tariffs has given way to renewed pessimism, driven by a lack of clarity around future tariff implementation and growing unease over the broader health of European economies..  This week in primary has been the slowest week of the year with the first 0 sales day of the week on Monday.  Nevertheless, Transurban Finance Co (TCLAU) managed to get a 2-part (€/£) offering through which was worth ~€1bn.  In distressed news,  BayWa (BYWGR) has reached a pact on necessary adjustments to its long-term restructuring agreement with key financing partners and major shareholders. The company will submit its restructuring plan shortly and has deferred a hybrid bond interest payment.  Also, Tullow Oil’s (TLWLN) bonds plummeted as analysts questioned the company’s ability to refinance its debt amid lower oil prices.  Finally, Pierer Mobility AG (KTMG/PIERER) said it will raise new capital at a steep discount to address negative equity booked last year.  Pierer will issue up to €150m of new shares at roughly a 58% discount to Thursday’s close.

6. Emerging Markets:

ARGENTINE GOVERNMENT ELIMINATES FX RESTRICTIONS FOR INDIVIDUALS AND SETS FX BANDS IN THE RANGE OF 1,000 - 1,400 WITH A MONTHLY ADJUSTMENT OF 1% FOR THE UPPER BAND AND OF -1% FOR THE LOWER BAND.

THE UPFRONT DISBURSEMENT FROM THE IMF WILL AMOUNT TO USD15BN. IFIs WILL CONTRIBUTE WITH ADDITIONAL USD3.5BN. ALSO THE GOVERNMENT IS EXPECTING USD2BN FROM NEW REPOS WITH PRIVATE BANKS.

THE NEW MONETARY REGIME WILL BE BASED ON TARGETS FOR TRANSACTIONAL MONEY (M2) COMPRISING CASH AND SIGHT DEPOSITS.

BESSENT’S VIST TO BUENOS AIRES TRIGGERS SPECULATION OF DIRECT BILATERAL LOAN WITH U.S.  U.S. Treasury Secretary Scott Bessent will meet with President Javier Milei and Economics Minister Luis Caputo in Buenos Aires on April 14. Following the news of Bessent’s visit, Argentina’s Central Bank (BCRA) announced that the activated USD 5 billion tranche of the China swap will be renewed until June 2026, effectively rolling over the debt with China.

LUKEWARM IMPACT FROM GENERAL STRIKE

Yesterday’s strike promoted by the National Federation of Unions (CGT) was moderately successful. Public-sector workers largely complied, shutting down government offices, suspending classes, and canceling over 250 flights. However, many businesses stayed open, and public buses kept running, leading to a mixed response overall. Stories on media outlets reported that in the coming days CGT leaders would seek to negotiate with the government overall monthly wage increases exceeding the 1% target sought by the authorities to keep inflation at bay.

VIEW: While the government favors a 1% monthly indexation schedule, it has encouraged individual sectors to negotiate wages independently. In light of the recent uptick in inflation, a one-off wage adjustment is likely. Real wages have been gradually recovering — a trend that will be crucial for the government’s prospects in the midterm elections. Nonetheless, we expect the administration to stick to the 1% indexation target in an effort to anchor inflation expectations, which have risen amid renewed FX pressures. The impact of yesterday’s strike largely reflected the unions’ mobilization capabilities, but also underscored their continued lack of credibility in the eyes of the public.

VENEZUELA: PDVSA CANCELS OIL SHIPMENTS TO U.S.

Reuters reported that PDVSA has suspended several loading authorizations previously granted to Chevron for exporting Venezuelan crude oil in April, according to three sources familiar with the matter. Two of the affected Chevron shipments had already been loaded and must now return to port; a third had not yet been loaded. The Venezuelan government, led by President Nicolás Maduro, condemned the U.S. actions as part of an “economic war.” While initial cargo loadings to China had been temporarily suspended after the tariffs were introduced, they have recently resumed. Until now, Chevron’s operations were largely unaffected by the tariffs, but the latest PDVSA move changes that.

VIEW: Cancellation of oil shipments to the U.S. while they resume for China, could be a retaliatory measure on behalf of Maduro, as by extending the licenses and keeping Venezuelan oil exempt from tariffs, the Trump administration has meant to keep this cheap oil flowing to the U.S. Besides, resuming the shipments to China seems as a veiled threat to the U.S., implying that Maduro will seek to bond closer with the Asian country. We had anticipated this and argued that it would be negative for bonds, particularly if it leads to retaliatory measures by the U.S. Maduro’s decision is meant to exert pressure for Trump to make up his mind on his  policy towards Venezuela instead of extending licenses for short periods, thus performing a balancing act meant to placate the hawkish sectors of his administration (Rubio, Waltz and the Florida clique).

7. Asia Credit:

Asia closed firmer with equities stronger at +0.8% on avg with NIKKEI being the lagger (-2.96%). Started to see more sellers in the afternoon, while it was buyers for HY till the tariff news after 4pm, where we saw some sellers coming in. We see oil prices continue their decline for a week, -3% due to the escalating trade war.

In China TMT low beta, saw PB buyers of TENCNT 5y and longer-dated BABA started to see buyers, likely seizing the opportunity on price dip with street lifting the 35s -2bps vs earlier session, while high beta saw two-way flows throughout the day; active names including LENOVO/XIAOMI 5y. Korea, KORELE/KOROIL 3-5y -1/-3bps and RM buying interest in KORGAS 29. Corps/fins, HYNMTR 2-5y saw two-way flows all day with the 5y FRN +2bps while the 2y FRN well-bid. Fin papers activities rather light today with active tickers WOORIB 28 and seller in KEBHNB 26.

SEA, sov INDON/PHILIP +0.375/+0.625pts vs today's open with buyers coming in the afternoon especially on INDON/INDOIS curve but PHILIP gave up and started to see sellers at the end of the day. HY, saw buyers of INDYIJ/MEDCIJ 29/KIJAIJ. MONGOL, sov +1pt with buyers on MONGOL 27/28 vs sellers on MONGOL 29/30. Corps/quasi, saw seller of CITULA vs buyer of GLMTMO.

China HY, throughout the afternoon bonds were pretty well-bid, we saw buyers in NWDEVL 6.15/ 6.25 perps alongside the NWDEVL 29/30s. Things turn more negative after the headlines that China will impose a 125% tariff on the US, with some sellers coming out on DALWAN 26 and Macau Gaming bonds.

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments, and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

The author(s) responsible for the preparation of this commentary hereby certify that all the views expressed herein accurately reflect their personal views only. The author also certifies that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

This commentary is not research or a recommendation and does not take into account whether any product or transaction is suitable for any particular client. SFI does not produce debt research and therefore this communication is not subject to all of the independence and disclosure standards and other requirements applicable to research reports under FINRA’s research rules. This document is intended for institutional investors only and is not subject to all of the independence and disclosure standards applicable to research reports prepared for retail investors. Clients should assume that this document is not independent of SFI’s proprietary interests. SFI trades, and will continue to trade, the securities covered in this document for its own account and on a discretionary basis on behalf of certain clients. Such trading interests may be contrary to or entered into in advance of this document.

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc. The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. disclaims any responsibility to update such views. This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.