StoneX Leveraged Finance Commentary - 241st Edition - 5/10/2025

May 10^th 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: Trimark (TRIMUS), Nutrisystem (KNSACQ), Century Casino (CNTY), Aventiv (SECRUS)
2. Private Equity, Private Credit, and ReOrg: Dynata / Research Now (EREWDS), Elevate Textile (ITXN), Men's Wearhouse (TLRD), Cirque Du Soleil (CIRQUE)
3. U.S. Distressed: Emergent BioSolutions (EBS), QVC Group (QRTEA/QVCN), AM General (AMGENE), New Fortress Energy (NFE)
4. U.S. High Yield: Newell Brands (NWL), AMC Networks (AMCX), Skillz (SKLZ), NGL Energy Partners (NGL)
5. Credits of Note: CoreCivic (CXW), Geo Group (GEO)
6. Converts: Wolfspeed (WOLF)
7. EU Credit: Golden Goose (GOLGOO), AccorInvest (ACCINV), Shift4 Payments (FOUR), Currenta Group (CURGRP)
8. Emerging Markets: Argentina, Colombia, Ecuador, El Salvador, and Panama
9. Asia Credit: Alibaba (BABA), Tencent (TENCNT), Korea National Oil (KOROIL), Hyundai (HYNMTR)

ATTACHMENTS

1. Four Macro Calls and Four Market Trades from Global Macro Strategist Vincent Deluard (415-713-5205 – [email protected])
2. StoneX Strategy — Sorting Through the Scenarios: The Fed Remains in a Gradualist Mindset from Senior Advisor Jon Hilsenrath ([email protected]) and 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), 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 $59.8mm vs. $74.7mm of inflows the previous week.  The Primary Market was slow again last week so most of the focus was on secondary trading. Trimark (TRIMUS) reported palatable numbers and held a call.  Ken Smalley covers TRIMUS if you want to compare notes.  Nutrisystem (KNSACQ) was a new name for the desk, and we closed two-sided. Century Casino (CNTY) was another new name for us, and we are working on the credit. Please reach out if you are involved in KNSACQ and/or CNTY. Aventiv (SECRUS) was a top name again, and we closed as a buyer of the Old and Bridge TL. The desk turned buyer of CBL & Associates Exit TL (CBL). Ben Briggs covers CBL and a few other interesting REIT situations and is available to speak. Anastasia (ANABEV) remained topical post-news, and we closed in touch with both sides.  Lastly, the desk closed as a seller of Lakeshore Learning (LAKSHI).

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)

Dynata / Research Now (EREWDS) came up a few times as accounts inquired about liquidity. Elevate Textile (ITXN) was active, and we closed as a buyer. The desk ended the week as a buyer of Men's Wearhouse (TLRD) - please show offers.  Lastly, we closed axed in Cirque Du Soleil (CIRQUE). Strategist Ben Briggs covers ITXN and CIRQUE for the desk.

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)

Following broader markets, Distressed rebounded this week, with spreads on the CCC Index (I00188US) closing -17bps tighter and YTW dropping -10bps to 11.36%. Emergent BioSolutions (EBS) reported their earnings on Wednesday after the close. The desk was active in the EBS 3.875 28 (68, 17.07%, Caa1/CCC+) pre-earnings on Tuesday, trading paper in the 65-66 context, and post-earnings in the 68-69 context. Our strategist Ken Smalley knows the situation extremely well and is available to get you up to speed. Another credit that Ken Smalley follows, QVC Group (QRTEA/QVCN) also reported earnings this week. On the news that the QVCN 6.875 29 (48, 30.45%, B2/B-) traded down 8.25pts, they have since rebounded to close 48-50 on the week. Last Friday, the AM General (AMGENE) 9.5 28 (56.00 31.56%, Caa1/B-) traded down -29pts on news that the USG will be canceling procurement of outdated vehicles, including the Humvee. Over the course of the week paper rebounded, however on Friday, paper took a leg lower, closing 55.5-56.5. New Fortress Energy (NFE) is set to report their earnings on Monday. The NFE 12 29 (66, 24.87%, B3/B) closed -4pts lower on the week. Last but not least, Cooper Standard (CPS) 5.625’s – ’27 traded up to 84 on Friday in the first round-lot trade following earnings. The equity was up over 12% this week to close at ~$24.66/share and has more than doubled since its April lows. Strategist Ben Briggs covers CPS here and has been and remains constructive.

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 bull market charged forward for the fourth straight week, the longest consecutive period of gains since last Fall.  HY spreads tightened 26bp to +342; YTW fell to 7.78%, a new five week low.  Lipper reported a $1.62B inflow for the week ending Wednesday, down from the $2.56B inflow of the previous week.  The energy market firmed in the tail end of the week as WTI traded above $60 with expectations of more tariff deals on the horizon.  Energy spreads tightened 25bp over the course of the week to +457. A relatively benign release of economic data and the positive tone fueled  $6.7B of new issuance this week.  In light of possible tariff effects, Newell Brands (NWL) priced $1.25B of 8.5 ’28 senior unsecured notes (100.875, 8.15%, B1/B+), roughly +120bp wide to the single-B Index.  Amid a very busy week for quarterly earnings releases, our Strategists Ben Briggs and Ken Smalley issued commentary on AMC Networks (AMCX) 10.25 ’29 (103.75, 8.64%, Ba3/BB), CoreCivic (CXW) 8.25 ’29 (105.875, 5.97%,Ba2/BB-), Geo Group (GEO) 8.625 ’29 (105.75, 6.43%, B1/BB), and Skillz (SKLZ) 10.25 ’26 (98.75, 11.11%, S&P:CCC). See Briggs commentary on GEO and CXW in the Credits of Note section below, and note that the desk traded and remains axed in SKLZ, an often overlooked credit.  SKLZ 1^st lien notes are worth exploring as the company ended the quarter with $254.3mm in cash and only $126mm in debt, providing an outsized yield for the 19 month tenure.  The desk had significant trades and remains axed in NGL Energy Partners (NGL) secured 8.375 ’32 (91.5, 10.13%, B2/B+). NGL closed on previously announced asset sales, receiving $270mm in proceeds, and are scheduled to release their next quarterly earnings on 5/29.  Ken Smalley is available to discuss the credit in further detail. 

Adam Rosenblum – High Yield Trader

Andrew Baigorria – Trading Associate

5. Credits of Note:

CoreCivic (CXW): 1Q25 results were released Wednesday 5/7/25 . Both revenue & EBITDA beat consensus and raised full year guidance to $335MM of adjusted EBITDA from $287MM. The updated guidance is based on 1Q results, updated occupancy projections, and assumptions for the reactivation of the Dilley (TX) Immigration Processing Center. It does not include unannounced contracts, which may provide further upside.

• Revenue was down 2% y/y to $489MM driven by the expiration certain contracts (Cal City & Dilley, both of which have since been re-activated), partially offset by the activation of other contracts & higher ICE populations
• Adj EBITDA was down 10% y/y to $81MM driven by the lower revenue, partially offset by lower operating expenses
• Ended the quarter with $75MM in cash & $856MM in recourse debt
• Gross/net leverage sit at 2.7x/2.4x, each up 0.1x sequentially
• $335MM mid of new FY25 guidance implies ~2.6x/~2.3x leverage at the end of FY25
• CXW repurchased 1.9MM shares for $37.9MM during the quarter (avg px of ~$19.95/shr vs. $22.60 close on 5/7/2025). $131MM of availability remains under their $350MM share buyback program, which has seen the company buyback 16.4MM shares for $219MM since 2022, at an average px of $13.30/share

Earnings Call Recap:

• Management sees $200MM to $225MM of incremental EBITDA upside if all 13k idle beds are activated. Would cost $25MM to $50MM of capex to activate all idle beds
• The timing of realizing that EBITDA is uncertain since the contracts are not signed yet, but when pressed management said if they were to make an educated guess it would by 2H26
• The mid of the incremental EBITDA referenced above, when added to guidance, implies ~1.4x leverage, even before accounting for the FCF generation that level of EBITDA would generate
• 1.4x is well below CXWs 2.25x to 2.75x target net leverage range (they sit at 2.4x today)
• Management stated when asked that they will stick with the current strategy of returning capital to shareholders via buybacks, however if the stock price were to rally materially, they may consider dividends. There is $131MM remaining on the company's buyback authorization
• M&A is possible to expand capacity but not planned, and any M&A would likely be funded with existing liquidity. Company has looked at a few facilities but declined to provide specifics when asked
• Already incurring some activation costs for long-term contracts that are anticipated but not yet signed – incurring the costs under “letter contracts” – basically short-term contracts while longer term contracts are negotiated & waiting for funding and approval
• While the company does not have a monitoring contract with the federal government, they do monitor ~20k to ~30k individuals for state & local governments. Were they to get a federal monitoring contract, they could begin to onboard individuals quickly, as the tech is already in place

Click here for the press release

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

GEO Group (GEO): 1Q25 results :. Both top and bottom line were a miss vs consensus, however the company did raise Adj EBITDA guidance to $478MM at the mid from $473MM previously, on revenue of $2.53B vs $2.5B previously

• Revenue was flat y/y at $605MM
• Adj EBITDA was down 15% y/y to $100MM driven by higher operating costs due to both reorganization in anticipation of future growth, and higher payroll taxes. 2Q is expected to be impacted by some of these items as well
• Ended the quarter with $65MM of cash & ~$1.7B of debt
• Gross/net leverage were up slightly sequentially to 3.9x/3.8x
• Revenue growth from new contracts already signed & forthcoming is anticipated to begin in 2H25
• Adj EBITDA guidance at the mid implies ~3.5x leverage at the end of the year, although it is worth highlighting that this guidance does not include the impact of new contracts that have not been announced, the company does expect some new contracts to be announced in 2Q25, so there is upside from the guidance provided today

Earnings call recap:

• Multiple potential contracts are in the works but yet to be announced. All told, all opportunities could results in $800MM to $1B of additional revenue and $250MM to $300MM of additional EBITDA
• At the mid, on a PF basis that would push leverage to ~2.2x, and lower considering the potential FCF generation
• Growth could come from both detention & electronic monitoring growth - there are about 46k beds available to ICE nationwide, 16k of those at GEO, and there is the potential that ICE will get funded for up to 160k beds and electronic monitoring for millions of individuals (up from ~160k now)
• Looking at purchase, leasing, or use of 3rd party facilities for additional beds, or repurposing of state facilities for higher margin ICE detainees
• Existing ISAP contract expires 7/31/2025, but company expect 1-2 year extension & a transition to a larger program
• Expect to reduce net debt by $150MM to $175MM in FY25 to ~$1.5B, 3.3x net leverage
• May sell an Oklahoma facility to the state for $312MM in gross proceeds in July (requires state govt approval/funding), and this could accelerate both debt paydowns and return of capital to shareholders
• Absent that sale, return of capital to shareholders likely begins in 2026
• Expect 2Q25 to be very active regarding contract signing with the Federal govt, so more announcements likely on the way

Click here for the press release

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

6. Converts:

Bonds traded this week: CABO 0 03/15/26, FARO 5 ½ 02/01/28, FLR 1 ⅛ 08/15/29, GRPN 6 ¼ 03/15/27*, LCID 1 ¼ 12/15/26, MCHP 0 ¾ 06/01/30, and RDFN 0 ½ 04/01/27

Wolfspeed Inc (WOLF) NO DEAL WITH 2026 CVTS – Company may pursue in-court or out of court restructuring.

•  Company did not reach a deal with the 2026 cvts
  • “The Potential Transaction was deemed not actionable and the Company decided to no longer pursue the Potential Transaction.”
  • Cleansing doc filed including exchange terms and financial projections
• Mgmt said on the conference call that they may pursue out of court or in court solutions to their capital structure
  • Going concern language will be in the 10Q
• Company did not take questions on the call
• 1Q largely in line. Company ended the quarter with $1.3bil in cash, down $75mm quarter-over-quarter.

In addition to three issues of convertible bonds, the 9 ⅞ 06/23/30 secured notes were issued in two tranches. The first $1.25bil tranche was issued in June 2023 to a single investor and does not trade. The second tranche was issued in Oct 2024 led by same investor as the 1st but as a 144a bond with additional parties. The second tranche has had limited trading.

7. EU Credit:

European Credit markets have remained firm over the course of the week following the cooling of tariff tensions and overall less market volatility.  Spreads on the iTraxx Crossover currently sit around 321bps at the close today and have tightened around 12bps over the week.  In the UK, focus has been around trade deals this week with the British government landing trade deals with both the US and India.   Primary picked up this week with lots of deals pricing this week and the week finished with around €35bn of issuance. Of note in HY, Golden Goose (GOLGOO) priced their €480m 6NC1 FRN to refi their existing debt,  AccorInvest (ACCINV) priced their €1.25bn 3-part offering, Shift4 Payments (FOUR) priced their €680m 8NC3 notes and Currenta Group (CURGRP) priced their €1bn 2-part offering consisting of a 5NC1 fixed and 7NC1 FRN.  Other deals priced this week also.  This week the desk has been active in Cheplapharm (CHEPDE) following recent results, Domestic and General (DGGLN) and Marston’s (MARSLN) among others.  In distressed news, Southern Water (SWSFIN) is set to refinance some of its debt with £800m of new bonds.  Additionally, a court ruled that Northvolt (NORTHV) founder did not mislead investors.  Finally, debt collector Lowell (GFKLDE) has asked for noteholders’ consent to agree to its debt overhaul which will see €250m of new money injected into the company.

8. Emerging Markets:

ARGENTINA: ANALYSTS REVISE CPI AND FX EXPECTATIONS TO THE UPSIDE AS AUTHORITIES DOUBLE DOWN ON ARS REVALUATION

Analysts participating in the central bank (BCRA) expectations survey conducted two weeks after the FX unification revised upward both their inflation and currency depreciation forecasts. In March, forecasters expected inflation to dip below 2% in June, following a downward trend, whereas they now expect it to stabilize around 2%, with year-over-year inflation reaching 31.8% by December 2025. The top 10 forecasters, meanwhile, made virtually no changes to their inflation estimates from June onward and remain relatively close to breakeven inflation implicit in the comparison between ARS fixed rate and inflation linkers, at around 1.6% m-o-m. On the other hand, FX forecasts were also adjusted to the upside, with the USD-ARS seen trading at 1,1171 by end-May (yesterday the official exchange rate closed at ARS1,114 per USD) and at ARS1,282 in October, ahead of the midterms.

VIEW: The government is all in disinflation via nominal appreciation of the Peso, but for this scheme to be successful inflation needs to collapse to the 1% area already in June, probably at a faster pace than the one depicted in the top 10 forecasters’ projections. However, financing real appreciation commands a strong inflow of USD given the sharp erosion of the trade surplus. True, the 2Q seasonal peak of agricultural exports will help, but inflows will certainly be needed as from 3Q to fend off FX pressures, particularly as dollar demand will be set to increase ahead of the election. In this regard, the authorities seem to be betting on proceeds from a new de-facto tax amnesty for dollar purchases below USD100k and potential short-term capital inflows by providing cheap FX hedge with the massive intervention of the past two days in the futures market (particularly centered on the December contract).

Again, we insist that this is a risky strategy that could take the FX close to the upper level of the band if it fails, which could undermine the electoral prospects of the government in the midterms. Bondholders are particularly concerned about the outlook for reserve accumulation, while the market consensus seems to be that the NIR targets for December and September are too ambitious (implying cumulative BCRA purchases of USD5.6bn by mid-June and USD10bn by September). The perception that NIR goals will not be met will likely stall further spread compression in the near-term, unless that by June we see evidence showing that disinflation is consistent with the authorities’ 1% target.

INDUSTRIAL PRODUCTION AND CONSTRUCTION ERASE GAINS IN MARCH

Industrial production and construction posted steep declines in March, following a bumpy but consistent recovery from last year's lows. The Industrial Production Index (IPI) fell 4.5% m-o-m, effectively wiping out the gains achieved during the second half of 2024. On a year-over-year basis, the IPI rose 5.2%, largely due to a low base of comparison, bringing the cumulative expansion in 1Q to 6.1% y-o-y. Meanwhile, the Synthetic Index of Construction Activity (ISAC) dropped 4.1% m-o-m, returning to the depressed levels seen in 2H24. From last year's bottom, the ISAC was up 15.8% y-o-y and printed a 5.6% increase in 1Q, though it remains well below pre-Milei levels.

VIEW: The buildup of uncertainty related to the lack of news on the IMF agreement was probably the main factor behind the March activity reversal. Meanwhile, data of other high frequency indicators (ie. mass consumption, auto sales, tax collection) is mixed. The authorities’ goal of driving down inflation with a major revaluation of the ARS is a two-edged knife, in our view, as it could backfire from the activity point of view given that it could trigger a negative wealth effect (as most Argentines’ savings are held in USD-denominated assets). For the activity recovery to remain on track, we will probably need to see abrupt disinflation -with the price of tradable goods even falling in dollar terms- and faster lending. Real appreciation will likely erode the trade surplus further, so an acceleration of capital inflows via the new de-facto tax amnesty or other short-term inflows -stimulated by the sharp reduction in the cost of FX hedge- is needed.

COLOMBIA: UPWARDS SURPRISE IN APRIL INFLATION COULD STALL MONETARY EASING.

Colombian inflation unexpectedly accelerated in April, posing a challenge for the central bank following the surprise 25bp rate cut last month. Annual inflation rose to 5.16%, up from 5.09% in March, and above all forecasts in the Bloomberg survey. In turn,  core inflation—which excludes volatile food prices—also rose to 5.29% y-o-y, again exceeding all projections. The main contributors to the inflation jump were rents, energy, restaurant, and food prices.

VIEW: We think that the surge in inflation could be driven by the acceleration of public spending in the context of FX pressures due to the negative terms of trade shock resulting from lower oil prices. This could lead the central bank (BanRep) to pause rate cuts in the May monetary policy meeting, thus reigniting pressures from President Petro. While Petro’s attempt to meddle with BanRep’s independence is unlikely to succeed, it will probably continue to generate negative headlines and could compromise the effectiveness of the authorities’ recent announcement of a more transparent fiscal strategy. While we are optimistic about regime change in the May 2026 election, we think that the near-term buildup of negative news could exert upward pressure on spreads.

ECUADOR: GROWING DIVISIONS WITHIN INDIGENOUS MOVEMENT BENEFIT NOBOA

A story from Diario Expreso reports on the growing internal division within Ecuador's indigenous political movement, Pachakutik. José Luis Nango, an elected assembly member from Pastaza, confirmed on May 8, 2025, that five to six of his fellow legislators remain committed to an agreement with President Daniel Noboa's government. This statement follows a meeting between eight Pachakutik legislators and Government Minister José De La Gasca, during which they discussed legislative priorities and reached certain agreements.

However, the national leadership of Pachakutik has denied the existence of such an agreement, highlighting a rift between the party's national coordination and its Amazonian base. Nango emphasized that their support stems from the grassroots structures in Napo, Pastaza, and Morona Santiago. He also noted that while the Amazonian legislators are aligned with the government, the rest of the bloc is still assessing their positions based on directives from their respective provinces.

VIEW: If Noboa secures the support of 6 of the 9-member Pachakutik caucus, he would still be 5 votes short of a working majority (77) in the 151-seat National Assembly. However, one lawmaker has already left the Revolución Ciudadana caucus, and Noboa could potentially negotiate support from the Social Christian Party (5 seats) and smaller parties (4).

We reiterate our view that maintaining governability will require moderation in the fiscal adjustment, especially in light of the recent negative terms-of-trade shock. In our view, it is likely that the IMF will agree to renegotiate fiscal targets, though expanding financial support may hinge on geopolitical considerations.

In this context, Special Envoy for Latin America Mauricio Claver-Carone commented today that Colombian President Petro’s visit to China presented an opportunity for Ecuadorian rose exports, which could suggest the potential for a more generous bailout package to curb Chinese influence in the region. Despite an improved outlook for governability, we believe the government still has limited room to implement politically costly reforms (e.g., labor reforms or cutting red tape) that would restore market access.

From a bond market perspective, further confirmation of Noboa’s increasing legislative backing could drive some spread compression, although fiscal risks remain a significant credit concern.

EL SALVADOR: INTERNATIONAL RESERVES IMPROVE IN APRIL, BUT FISCAL UNCERTAINTY LOOMS

Gross international reserves rose by USD 691mn in April, totaling approximately USD 4.8bn—an overall increase of USD1.1bn since the start of 2024. After the March boost from IMF disbursements, April's gain was supported by the gradual normalization of reserve requirement levels in line with the IMF program. As a result, gross reserves remain above the IMF’s indicative targets for both 1Q and 2Q.

VIEW: This is positive news for bonds, which could have been driven by lower external needs due to the boom in remittances and also by the decline in oil prices (as El Salvador is a net oil importer). We remain wary about El Salvador’s commitment to meeting the fiscal targets, particularly due to the negative impact this could have on growth and the president’s popularity.

PANAMA: GOVERNMENT MULLING PLANS TO EXPORT STOCKPILED COPPER

Panama's government is evaluating the legal framework for exporting copper concentrate stockpiled at First Quantum’s closed mine. Industry and Commerce Minister Julio Molto said a decision is expected soon, citing environmental concerns due to the material's deterioration over time. The legal team is reviewing options to ensure any action complies with the law, and a safe management plan is being developed. In March, President Mulino authorized the release of 121,000 tons of the material, though details were not disclosed.

VIEW: While this is marginally positive from the point of view of fiscal and external accounts, it does not imply a game changer in terms of the mine re-opening, which should have a major sway on the outlook for bonded debt. In this vein, we remain skeptical that the mine production can be resumed soon given the major legal challenges. We see Panama growing barely 3% in 2025 and a fiscal deficit of at least 5% of GDP, while the likelihood that the country taps international markets in 2H are slim. Instead, we expect the government to source USD3bn from new banking loans and from domestic issuance. The risk-reward balance in bond prices is not enticing, in our view, given that we do not believe the potential impact of de-rating and of further fiscal slippage is fully priced in.

9. Asia Credit:

Ended the week in a positive sentiment ahead of long weekend in Southeast Asia; equities still mixed with HSI +0.4% while CSI -0.17% and spreads -1/-3bps in credits even though started seeing sellers coming in the afternoon session. China TMT, desk was active in BABA 37 and started to see buyers in other low beta names TENCNT front end and long end. Korea, KOROIL front end were seen active two way but still finished the day -2bps while in corps, PKX 30 gave up some of its earlier gains in the early session -2bps with seller hitting down +1bp while HYNMTR 2-5y complex saw more buyers coming in the afternoon session after felt heavier in the morning.

SEA, INDON/PHILIP saw buyers coming in the afternoon +0.125pts with RM interests on the sukuk lines. MONGOL sov +0.125pts with sellers in the 28/30s while in corps/quasi, MGMTGE saw active two-way vs buyers in GLMTMO/MONMIN.

Quiet afternoon on the China and India HY side and stable. Indo HY, we saw Japfa Comfeed looking to meet investors in Singapore and Hong Kong on 15/16 May and 19 May, JPFAIJ 5 ⅜ 03/23/2026 98/99.5 indic. But main focus remained on the new MEDCIJ 30 that was traded up earlier in the day +0.5pts but started to see profit takers coming post lunch and closed the day at $93.375/95.625, while the rest of MEDCIJ lines saw sellers -0.125pts but we did see some buying interests on the downs. KIJAIJ remained well-bid +0.375pts and started to see buyers coming for INDYIJ. We saw Vedenta stable after being weaker in morning.