StoneX Leveraged Finance Commentary - 5/2/2025

May 3^rd 2025

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

TRADING DESK COMMENTARY – NOT A RESEARCH PRODUCT

TABLE OF CONTENTS

1. Loans: Aventiv (SECRUS), Loyalty Ventures (LOVEIN), CBL & Associates (CBL), Anastasia (ANABEV)
2. Private Equity, Private Credit, and ReOrg: American Beacon/Resolute Investment (AMBEA), West Marine (WMAR), Cirque Du Soleil (CIRQUE), Audacy (CBSR)
3. U.S. Distressed: Saks Global (SAGLEN), Spirit Airlines (SAVE/FLYY), Cooper Standard (CPS), Emergent Biosolutions (EBS)
4. U.S. High Yield: Jefferson Capital (JEFCAP), IPL Plastics (TOUCAN), Whirlpool (WHR), Five Point Operating (FPH)
5. Credits of Note: Cooper Standard (CPS), Pebblebrook Hotel Trust (PEB)
6. Asia Credit: Alibaba (BABA), Lenovo (LENOVO), Shinhan Bank (SHNHAN)

ATTACHMENTS

1. CBL & Associates Properties from Strategist Ben Briggs (212-692-5123 – [email protected])
2. StoneX Strategy: The Repricing of American Power: Markets, Tariffs, and the New Economic Order from Chief Market Strategist Kathryn Rooney Vera (305-913-9112 – [email protected])
3. Nature Is Healing: Tariffs Will Not Be So Bad for Growth from Global Macro Strategist Vincent Deluard (415-713-5205 – [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 an inflow of $74.7mm vs. $647.9mm of outflows the previous week.  As we flip the calendar into May, the market expects more new deals; we will see. The desk traded more Aventiv (SECRUS) old TL, leaving us a buyer. We are also a size buyer of the Bridge TL.  Loyalty Ventures (LOVEIN) percolated after the Plaintiff’s Statement with Regard to the Conversion of the Defendants’ Motion to Dismiss to a Motion for Summary Judgement was filed on 5/1. We view this as a slight positive and a good time to take a print as litigation can often go sideways/turn negative abruptly.  Ken Smalley covers LOVEIN for us. We got tied up on a decent size block of the CBL & Associates Exit TL (CBL).  CBL is worth a look at ~12% to the 26’ maturity and ~10% to 27’ maturity. Ben Briggs covers CBL for us. Anastasia (ANABEV) remained topical post-news, and we closed in touch with both sides. Kronos / KIK (KIKCN) came up a few times – let us know if you are involved.  Lastly, the desk closed as a seller of ETC Group (EOSUSF) and Del Monte (DELMFD).

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)

American Beacon/Resolute Investment (AMBEA) came up a few times, and we closed the week axed after a piece failed in a BWIC. West Marine (WMAR) was a new name for the desk - please reach out if involved. Cirque Du Soleil (CIRQUE) seems to have stabilized at this lower level.  Let us know if you are involved, as we can help on either side. Strategist Ben Briggs covers CIRQUE here. Lastly, the desk closed axed in Audacy (CBSR).

Doug Gervolino – Loan & ReOrg Equity Trader

3. U.S. Distressed:

AXED: Akumin (AKUCN), AMC Entertainment (AMC), Brightline East (BRIEAS), 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)

The amount of US distressed debt ($186B) seems to have peaked for the time being as broader markets have pared their losses since the beginning of April. A highly topical name this week was again the Saks Global (SAGLEN) 11 29. Post their earnings release paper traded down on heavy volume, reaching as low as 52-53. Paper reversed declines in the latter half of the week, closing 61-62. Strategist Ben Briggs was on the SAGLEN call and can share his notes with you. Spirit Airlines (SAVE/FLYY) listed their equity on Tuesday, the equity traded down immediately and closed down -31% on the first day of trading, finishing 34% lower on the week. The SAVE 11 30, following the move in the equity, traded down -3.5pts on the week to close 79-80. Ben Briggs is also available to discuss SAVE. Another name that Ben Briggs follows closely, Cooper Standard (CPS), reported their earnings on Thursday after the close. Ben Briggs has been constructive on the CPS 5.625 27 for some time and remains so following this earnings release. Please reach out if you would like to discuss. Finally, Emergent Biosolutions (EBS) reports their earnings on May 7th. The EBS 3.875 28 remain topical, gaining 5pts this week to close 64.5-65. They also announced a $65mm contract with the Ontario Ministry of Health to supply NARCAN for 3 years. Strategist Ken Smalley covers EBS for us and is available to discuss.

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 ended in positive territory for the third straight week in the midst of the quarterly earnings season.  HY spreads stood at +368; and YTW fell to 7.81%, reaching a new four week low.  Lipper reported a $2.5B inflow for the week ending Wednesday, reversing the $1.56B outflow of the previous week.  The primary market was relatively subdued, with just $3.29B coming to market in three new deals:  $500mm Jefferson Capital (JEFCAP) 8.25 ’30 (101.375, 7.84%, Ba3/BB-), $1.325B IPL Plastics (TOUCAN) 9.5 ’30 (100, 9.50%, B-), and $850mm PennyMac (PFSI) 6.875 ’32 (99.75, 6.92%, Ba3/B+).  The latest fallen angel to enter the HY universe this week was Whirlpool (WHR), now rated Ba1/BB+.  The capital structure repriced to reflect current ratings, e.g.:  WHR 4.75 ’29 (94.25, 6.47%, Ba1/BB+) trading at +255  (+ 17bp wide to the BB Index).  Please call the desk for current levels as paper changes hands from IG to HY holders.  We are axed in a relatively short-dated ‘sleep-safe name’:  Five Point Operating (FPH) 10.5 ’28 (102.125, 6.33%, B3/B+).  With cash of $528mm, total debt of $537mm, and LTM FCF of $198mm, it is likely to expect an early redemption of the notes when the call price drops to par in November of this year.

Adam Rosenblum – High Yield Trader

Andrew Baigorria – Trading Associate

5. Credit of Note

Cooper Standard (CPS): 1Q25 results were released Thursday, and after the Friday morning call which went well, the stock hit 52-week highs. We have been and remain constructive on this credit

• Revenue was down 1% y/y to $667MM driven by FX headwinds, partially offset by positive volume and mix, including net customer price adjustments
• Adj EBITDA was up 100% y/y to $59MM, driven by a 246bps y/y improvement in gross margin to 11.6% and lower SG&A & Engineering costs, and the timing of certain royalty payments, partially offset by general inflation
• Burned $32MM of cash bringing LTM FCF generation to $25MM
• Ended the quarter with $140MM of cash & ~$1.1B of debt
• Gross/net leverage sit at 5.2x/4.6x, down 0.9x/0.5x sequentially
• Received net new business awards totaling $55MM in anticipated future annualized sales

Call Highlights:

• Management believes that the net leverage ratio could get to ~2x (4.6x currently) by end of 2027- drivers are expected to include some volume increases but also margin growth & cost cutting
• When asked directly, management stated that FY25 EBITDA guidance remains at $218MM (mid - implies 4.4x net leverage at year end, down 0.2x from current 4.6x), however they did highlight that tariffs continue to cause uncertainty
• Noted that they have seen some demand pull forward and also stated that given the way sales are going right now, they think customers will need to replenish supplies in 2H25

Click here for press release

Click here for presentation

Please reach out to strategist Ben Briggs to discuss (212-692-5123 – [email protected])

Pebblebrook Hotel Trust (PEB): 1Q25 results were released Thursday. Both revenue and EBITDA beat consensus

• Revenue was up 2% y/y to $320MM driven by the reopening of facilities at a resort that was partially closed in 1Q24
• Adj EBITDAre was down 7% y/y to $57MM driven by higher operating costs due to facilities reopening and higher wages, partially offset by the higher revenue
• Generated $30MM of FCF
• Ended the quarter with $208MM of cash & $2.3B of debt. The revolver remains undrawn
• Gross/net leverage of 6.4x/5.8x, each up 0.1x sequentially
• Lowered FY25 Adj EBITDAre guide to $338MM at the mid, down from $349MM at the mid. Implies year-end leverage of ~6.1x

Click here for 10-Q

Click here for presentation

Click here for press release

Please reach out to strategist Ben Briggs to discuss (212-692-5123 – [email protected])

6. Asia Credit:

Asia closed the week in a firmer tone; HSI ended the week +1.74%, credit spreads unch/-2bps, CDS -1.75bps, and flows 3:1 skewed towards buying. Activities in China TMT sector were better in the afternoon even though volumes still lighter than usual and regional FM/RM involved; saw two-way flows in BABA 35 vs seller of the 5y complex -1/+1bp. High beta, LENOVO 3-5y complex aw two-way flows with RM active unch/-1bp. Korea, in quasi KOROIL/KORELE/KOBCOP 28/30 were well-bid -1/-2bps. Corps/fins, focus today in the high beta IG names with buyers seen in the SKBTAM/LGELEC/LGENSO front end. Fins, saw regional RM looking to trim SHNHAN 34/NACF 26 vs buyers of NACF 29.

INDON/PHILIP saw RM/FM active two-way in the 5y complex and sellers on the longer dated paper unch/-0.25pts. Indo HY saw better flows in the afternoon session; saw buying interest in the 29s and INDYIJ vs seller of the 27s -0.125pts. MONGOL sov saw lighter flows than usual with saw buyers of MONGOL 26/30 and GLMTMO but unch with desk active in TDBM.

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.

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