Jefferies Financial Group Inc. JEF disclosed its indirect exposure to First Brands Group, LLC, which filed for Chapter 11 bankruptcy protection on Sept. 29, 2025. This sparked a negative sentiment among investors, and Jefferies’ shares lost 7.9% in yesterday’s trading session.
First Brands, an aftermarket auto parts manufacturer, supplies major retailers such as Walmart, AutoZone, NAPA, O’Reilly Auto Parts and Advance Auto Parts. The firm filed for bankruptcy, disclosing its liabilities that exceed $10 billion, sparking fears among debt investors and broader stress in corporate debt markets.
The high-profile bankruptcy prompted concerns over possible ripple effects for financial institutions exposed to its debt. Several Wall Street lenders, including Jefferies, have been exposed to First Brands’ supplier invoice-linked facilities. This resulted in investors assessing the exposure and its potential impact on Jefferies’ financials.
Jefferies’ Exposure
Jefferies noted that Point Bonita Capital, a division of Leucadia Asset Management (“LAM”), manages a $3 billion trade-finance portfolio that includes receivables purchased from First Brands since 2019. The portfolio is backed by $1.9 billion of investor equity, of which LAM owns $113 million or about 6%.
Under these arrangements, Point Bonita buys First Brands’ receivables due from retailers, a process known as factoring. Payments had been received on time until Sept. 15, 2025, when First Brands stopped transferring funds collected from retailers. In its bankruptcy filings, First Brands said its advisors are investigating whether some receivables were turned over to multiple financing parties.
Jefferies said it is in contact with First Brands’ advisors and is working to protect the interests of Point Bonita and its investors.
Separately, Apex Credit Partners LLC (“Apex”), a subsidiary of Jefferies Finance LLC (50%-owned by JEF), manages $4.2 billion in collateralized loan obligations (“CLOs”). Apex-managed CLOs hold almost $48 million of First Brands’ term loans, around 1% of total CLO assets. Apex also retains between 5% and 9.9% of each CLO’s equity tranche, as required by risk-retention rules.
Jefferies emphasized that it holds no direct securities or debt obligations of First Brands.
JEF’s Price Performance & Zacks Rank
Over the past six months, JEF shares have gained 28% compared with the industry’s growth of 31.6%.
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Currently, Jefferies sports a Zacks Rank #1 (Strong Buy).
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This article originally published on Zacks Investment Research (zacks.com).
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