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US Treasury yields were stable across the curve on Friday. Preliminary US Durable Goods Orders for April surprised on the upside at 0.7% vs. expectations of a 0.8% drop. However, the previous month’s reading was revised lower from 2.6% to 0.8%. Capital Goods Orders rose 0.3% vs expectations of 0.1%. The previous month’s reading was revised lower from 0.1% to -0.1%. The Michigan Consumer Sentiment Index came at 69.1, higher than expectations of 67.7, but lower than the prior reading of 77.2. S&P and Nasdaq closed higher by 0.7% and 1.1% respectively. US IG CDS spreads tightened 1.5bp and HY spreads were 5.9bp tighter.
European equity markets ended lower. Europe’s iTraxx main CDS spreads were flat while crossover spreads were tighter by 1.7bp. Asian equity indices have opened in the green this morning. Asia ex-Japan CDS spreads widened 0.8bp.
Emirates Development Bank PJSC Upgraded To ‘AA’ On Improved Clarity Of Mandate; Outlook Stable
Fitch Revises Outlook on Poly to Negative, Downgrades Hengli HK; Withdraws Ratings
There are different types of bankruptcies in the US. Chapter 11 is know as the “reorganization” bankruptcy and is available to individuals, sole proprietorship, partnerships and corporations. Corporations file for chapter 11 so that they can continue to operate while being protected from creditors claims to collection activities and property repossession.
Petitions to file for Chapter 11 can be voluntary or involuntary. In the case of a voluntary filing, the debtor must provide a schedule that provides details of its financial position. Upon filing a voluntary petition for relief under Chapter 11 or, in an involuntary case, the entry of an order for relief, the debtor automatically assumes an additional identity as the “debtor in possession.” Once the petition is filed, there is an automatic stay order that suspends all judgments, foreclosures, collection activities, and property repossessions by creditors that arose before the petition.
The bankruptcy court requires debtors to propose a restructuring plan within 120 days from the date of filing, which then grants the debtor another 180 days to obtain confirmation of the restructuring plan. The plan is deemed to have been accepted by courts if it is accepted by creditors with at least two-thirds in amount and at least half of the number of allowed claims.
On Seeing Conditions for a June Rate Cut – ECB’s Cipollone, Panetta
Piero Cipollone, ECB Executive Board member
“I expect a first move to reduce rates at the next ECB meeting, then we will have to discuss”
ECB GC member Fabio Panetta
“We have our mantra of deciding meeting by meeting, but I do believe that the consensus has widened”
On Higher Path for Rates Boosts Need to Lift Revenue – US Treasury Secy, Janet Yellen
“We’ve raised the interest-rate forecast… I don’t have a hard-and-fast rule, but I would not like to see it drift above 2% (inflation-adjusted interest payments compared with GDP)… We have included a lot of deficit reduction measures in the budget”
On Central bankers should acknowledge blind spots – Fed’s Loretta Mester
“Markets certainly want to know exactly … ‘when are you going to cut rates?’ That’s what they focus on… We’ve become much more transparent… If you only communicate the modal view, you’re kind of miscommunicating your actual view “