StoneX Leveraged Finance Commentary - 4/25/2025

April 26^th 2025

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

TRADING DESK COMMENTARY – NOT A RESEARCH PRODUCT

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Also – Please join us on 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: TruGreen (SVMSTR), CBL and Associates (CBL), Dynata / Research Now (EREWDS), Netceed/ ETC Group (EOSUSF)
2. Private Equity, Private Credit, and ReOrg: Spirit Airlines (SAVE), Cirque Du Soleil (CIRQUE), Dynata / Research Now (EREWDS), The Container Store (TCS)
3. U.S. Distressed: Saks Global (SAGLEN), Spirit Airlines (SAVE), New Fortress Energy (NFE), Emergent BioSolutions (EBS)
4. U.S. High Yield: Queen Merger (QXO), Jane Street (JANEST), Excelerate Energy (EXCENE), Ritz-Carlton Yacht Collection (CRYACU)
5. Asia Credit: Alibaba (BABA), Tencent (TENCNT), Xiaomi (XIAOMI), Korea Gas (KORGAS)
6. Commodities: Copper Earnings – Freeport-McoMoRan (FCX), Teck Resources (TECK)

ATTACHMENTS

1. Office Properties Income Trust (OPI) from Strategist Ben Briggs (212-692-5123 – [email protected])
2. Altice USA (ATUS) from Strategist Ken Smalley (212-485-3570 – [email protected])
3. I Respect You, but You Are Still Wrong: An Open Letter to Deflationists from Global Macro Strategist Vincent Deluard (415-713-5205 – [email protected])
4. StoneX Strategy — Heat Exchange Conflict Between Trump, Powell Adds to the Central Bank Short-Run Policy Inertia from Chief Market Strategist Kathryn Rooney Vera (305-913-9112 – [email protected])
5. StoneX Strategy Round-Up 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), 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), Loparex (LOPARX), Loyalty Ventures (LOVEIN), Leslie Pools (LESL), Parts Authority (PAIHOL), PREIT Associates (PEI), Resource Label (RESLAB), The Container Store (TCS), Tosca Services (TOSCSE), Trimark (TRIMUS), Tropicana (NAKEJUI) and TruGreen (SVMSTR)

US loan funds saw outflows of $648mm vs. $386mm the previous week.  The primary market was quiet except for the $1.23 X Corp / Twitter (TWTR) deal. We traded more TruGreen (SVMSTR) 2Ls, and it left a seller. We think 2Ls are worth a look at current levels. The desk is a seller of CBL and Associates Exit TL (CBL), as well as other REITs.  Ben Briggs covers SVMSTR and CBL and can get you up to speed.  The desk was active in Dynata / Research Now (EREWDS) and closed the week as a buyer. Netceed/ ETC Group (EOSUSF) remained topical as we are in touch with supply.  Ken Smalley covers EREWDS and EOSUSF for us.   We had accounts asking us about Cornerstone (CNR) and would like to see offers.  Lastly, the desk is a buyer of Elevate Textile (ITXN) FILO. Ben Briggs covers ITXN for us as well.

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)

Spirit Airlines (SAVE) was topical after announcing the equity will be listed on the NYSE on 4/29. This should increase liquidity, and we will hand it off to our public equity desk.  Cirque Du Soleil (CIRQUE) was lower and has settled in the 9-11 range.  We would like to see offers. Ben Briggs covers both SAVE and CIRQUE for the desk. Dynata / Research Now (EREWDS) remains one of our top picks for reorg equity. Please reach out to Smalley. Lastly, we have a seller of The Container Store (TCS) 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 International (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)

Another active week in distressed, dominated by conflicting news flow on tariffs. A major decliner over the past couple weeks has been the Saks Global (SAGLEN) 11 29 (64.75, 23.98%, B3/B). Since April 2nd, 2024 paper is down -16.25pts on continuing worries that margins and supply chains in the retail sector will be compressed. It was also reported on Thursday that SAGLEN is considering raising more debt to help strengthen their balance sheet. SAGLEN has scheduled a call for Monday morning to discuss results, and Strategist Ben Briggs will be on it. Spirit Airlines (SAVE) was also topical in the end of the week as the SAVE equity is scheduled for listing on the NYSE on April 29th. The SAVE 11 30 (83.5, 17.08%, Caa1/B-) are off the lows of early April, closing the week 83.25-84. The borrow on the Save 11s remains tight at -6.5% versus GC +4.4%, after starting out at -8.5% when the bond first started trading.  Briggs follows SAVE for us and is available to discuss. The desk continues to be active in New Fortress Energy (NFE), which now trade with a better tone since they finalized the sale of their Jamaican assets to Excelerate Energy (EXCENE). The desk traded the NFE 6.5 26 in the 80-81 context on Friday. The Emergent BioSolutions (EBS) 3.875 28 traded higher this week, off their lows from 57. Our strategist Ken Smalley knows the situation extremely well and remains constructive here. EBS reports their earnings on May 7^th.

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)

The High Yield sector posted gains for a second week, in spite of the volatility over continued tariff headlines.  HY spreads tightened over 30bp +368, and YTW fell to 7.91% reaching a new three week low.  Lipper reported a $1.56B outflow for the week ending Wednesday, just under the $1.64B outflow of the previous week.  The primary market was active with three issuers coming to market seeing $4.4B in new deals: $2.25B Queen Merger (QXO) 6.75 ’32 (100.5, 6.63%, Ba3/BB-), $1.35B Jane Street (JANEST) 6.75 ’33 (100.5, 6.63%, Ba1/BB), and $800mm Excelerate Energy (EXCENE) 8 ’30 (101.625, 7.52%, BB+).  We continued to be active in our name, SNEX 7.875 ’31 (104.125, 6.64%, Ba3/BB-), trading +40bp wide to the BB Index. SNEX received approval this week from CME Group for our New York vault, enabling us to store and deliver precious metals under COMEX and NYMEX contracts.  In the travel space, we are axed to offer in conjunction with our European trading desk,  Ritz-Carlton Yacht Collection (CRYACU) secured 11.875 ’28 (99.25, 12.54%, NR). There is an interesting dynamic developing in the automobile sector.  Over the last quarter, the spread between Crash Champions (CRASHC) secured 8.75 ’29 (89.5, 12.28%, B3/B-) and Caliber Collison (CALCOL) secured 7.625 ’32 (103.25, 6.63%, B3/B) has widened +465bp to a differential of 576bp. 

Adam Rosenblum – High Yield Trader

Andrew Baigorria – Trading Associate

5. Asia Credit:

Ended the week on a firmer tone vs previous weeks, even though today's PM session was slightly weaker than the morning session with equities closing shy of the green and flows 2:1 skewed towards buying. China TMT sector, BABA curve gave up its earlier gains and closed +1/+2bps while TENCNT 51 saw buying interests in afternoon, in high beta XIAOMI 31/51 saw FM two-way flows and closed -1/+2bps. Korea, in quasi KORELE front end was active with buying interest on the 2y vs seller of 3y while KORGAS 29 saw seller in the afternoon +1bp.

However, the Korea paper focus today was on the corps/fins with the new issuance of KTGC; 3y ended the day +89/+87.5, very active two-way flows today, lifted more than -20bps (RO:+118 vs 3y UST). New HANFGI 28 finished the day at +125/122; was lifted more than -10bps early in the morning before seeing profit takers hitting down +7bps (RO: +130). And also from the Korea primary market, CITNAT is planning to issue 3y fxd/frn and/or 5y. Japan was also busy with  a couple new issuances today, including new NIPLIF 55 that came tighter than expected at 6.5% (IPT: 6.875%) with FM/RM involved, ended the day at $101/101.35 (RO: $100) In the HY space, NSANY got downgraded to BB by Fitch, citing a deteriorating industry environment due to US tariffs in the automotive sector but didn't see too much price movement as we think it's already being priced in.

SEA, INDON/PHILIP overall remained well-bid despite seeing sellers coming at the end of the day +0.125pts with the 5-10y active. Quasi finally saw better flows in the afternoon after a rather subdued morning session with two-way flows in FRIDPT/PERTIJ/PLNIJ. Same in Indo HY with buying interests seen on PTSMGP/MEDCIJ 26/KIJAIJ/STENGE +0.125/+0.25pts. MONGOL sov was also busy with two-way flows on the 28/30/31 +0.125pts and corps/quasi saw seller of MGMTGE vs buyer of TDBM.

China HY in the afternoon was quieter and more stable. NWDEVL 27 closed tighter at 78.5/80.5, and we saw buyers in the NWDEVL 6.15 perp. Distressed-wise, we continue to see sellers of the SUNAC curve from PBs.

6. Commodities:

Freeport-McMoRan (FCX):  First glance looks inline on the whole (which you could argue is a win). Maintaining 2025-2027 sales guidance for Cu, Gold, and Moly that they introduced last quarter.  Capex looks unch as well (would consider another win). 1Q Copper sales a bit better vs expected, with Gold and Moly light (FY ’25 guide unch).   Introducing new sensitivities on the deck for the Comex Copper premium vs LME (+/- $0.10/lb = $135M in EBITDA)….which at the current 13% premium represents ~$800M annually.  Consolidated unit net cash costs for ’25 outlook looks better as well…from $1.60 guide last quarter to $1.50 this time around (via higher gold px).  Net debt continues to rise; not great to see…from $1.1B last Q to $1.5B this quarter.  FCX talking up US production, reserves,  and tariffs on the slides…which I’m expecting we’ll hear more on the call @ 10AM EST.   Not seeing any major land mines on the deck (unless I missed something)….which forces me to circle back to the concept that FCX is down -7.6% YTD vs Comex Copper +21% YTD and Gold +27% YTD.  I’m a bit surprised only +1% pre-mkt…but then again FCX doesn’t have a great track record trading day of print.  I like FCX here (recession fears aside).

Teck Resources (TECK):  Looks strong across the board….print, margins, volumes, and guide.  Why it looks +3-5% pre-mkt.  Good to see QB2 looking strong, as indicated by CEO: "The overall performance of QB continues to improve, as indicated by the average daily throughput rates, and recoveries and grades are in line with our expectations."  Keeping 2025 guidance unch also a huge win (from my seat at least)….as it feels like we’ve been programmed for disappointment the last couple of years.  Reminder outside of IVN CN and CS CN, TECK the worst performing copper name YTD (-14%).  So I’m looking for a healthy rebound from here, and getting the sense more funds looking at the name on the long side again from convos..

Michael Lovecchio (347-268-1509 – [email protected])

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.

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