Morning, Aaron here! Today, I'm going to unpack leveraged finance. It's where private-equity firms fund acquisitions.

Let's go.

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1. The Fed's pandemic-era rates strategy is over. The Federal Reserve had been keeping rates anchored so every entity, from struggling cruise lines to private equity-backed companies, raised record numbers in high-yield bonds and leveraged loans so they could — almost literally — stay afloat.

Rising rates, however, are putting an end to ultra-cheap money, and deals have ground to a halt in recent months.

Steven Oh, PineBridge Investments' global head of credit, said at an event on Tuesday that there was a "significant widening" (Wall Street speak for pricier deals) of credit spreads in May. But he said this might reverse through June, which means, if spreads "tighten" (become cheaper for borrowers to raise money), dealmaking could pick up.

Oh cautioned though that company earnings might stutter, while corporate defaults (when companies don't pay their debt on time) may tick up.

That said, last week saw the first new high-yield bond deals since May 18.

Pipe company Advanced Drainage Systems raised $500 million, while cruise line Carnival raised $1 billion in bonds, a banker familiar with the transactions told Insider.

As the debt markets pry open, Wall Street banks will pounce to offload any loans they've underwritten to avoid taking a loss. And market observers will be watching Elon Musk, should he attempt to raise money in the capital markets for his Twitter buy.

"We will look at Twitter as a credit," Jeremy Burton, a portfolio manager with PineBridge, said at the company event. "But what's the business plan for Twitter? We don't really know."

Meet some of the savviest leveraged-finance bankers on Wall Street here.

In other news:

2. Steven Oh's not the only one worried about defaults. Deutsche Bank predicted that the US corporate default rate will spike to 10%. Yikes.

3. Bain Capital raised $2 billion for another Special Situations Fund. With worries about corporate defaults and weaker earnings, the private-equity firm is gearing up to snare distressed assets.

4. Credit Suisse's global head of investment banking said the embattled Swiss bank is 'back.' David Miller seeks to remind Wall Street that the investment bank makes up 44% of Credit Suisse's revenue despite a slew of scandals last year. It comes as the Swiss bank weighs a fresh round of job cuts after warning of a second-quarter loss, according to Bloomberg. 

5. Popstox wants to help traders catch the next meme stock before it's cool. The alt-data startup is banking on hedge funds' analysis of social media, while also providing insight for fad-hungry retail investors. Here's how Popstox simplified social-media data.

6. Citadel Securities and Virtu are teaming up with Fidelity and Schwab. As per Bloomberg, the quartet of money managers are building a crypto-trading platform to increase access to digital assets.

7. BlackRock is debuting an ad campaign to cozy up to Washington. The campaign will look to improve the asset manager's image at a time of heavy scrutiny for its ESG approach.

8. Wells Fargo added a new C-suite staffer. The new hire follows on from the nearly 90 executives the bank has brought on in the last few years. Here's an exclusive look at Wells' senior recruits.

9. Staying on Wells and hiring, the bank has paused a controversial policy that led to "fake" job interviews. Chief Executive Charlie Scharf suspended Wells' "diverse slate" initiative for several weeks so the bank could figure out how not to look like the NFL.

10. Kohl's and Franchise Group are going exclusive. Franchise is weighing a nearly $9 billion bid (including debt) for Kohl's. The retail operator's bid comes after competing offers from Sycamore Partners and Brookfield Asset Management, among others.

Done deals:

• Antelope, a pet products company backed by Alpine Investors, bought pet supplier Diggin' Your Dog and Super Snouts. The purchase gives Antelope three pet product companies: Diggin', pet food shop Bocce's Bakery, and pet insurer Doggo.
• Sauce Labs, a software testing company, got another injection from alternative-investment firm TPG. This is the third investment TPG has made in Sauce.

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Curated by Aaron Weinman in New York. Tips? Email aweinman@insider.com or tweet @aaronw11. Edited by Hallam Bullock (tweet @hallam_bullock) in London.