China

China opens its exchange bond markets to foreign investors.

The People’s Bank of China announced another step toward greater global access to China’s financial markets. According to a Friday statement from the People’s Bank of China, China will allow foreign institutional investors to purchase bonds traded on its smaller exchange market.

Qualified foreign institutional investors, ranging from central banks and sovereign funds to commercial banks and pension funds, will be able to trade bonds and invest in derivatives on the exchange market, in addition to other bond-based instruments permitted by the PBOC and China’s securities regulator.

Evergrande

The Chinese property sector’s train wreck continues: Evergrande will roll defaulted debt into new bonds.

On Friday, Justin posted the main point of the defaulted debt juggling:

Evergrande is said to be considering issuing new bonds to repay offshore creditors the principal and interest on their debt.

Reuters has posted more information, which makes for interesting reading as Evergrande attempts to sort out $22.7 billion in offshore debt deemed in default after missing payment obligations late last year.

According to one of the sources, Evergrande is looking to repay offshore creditors the principal and interest by converting them into new bonds, which will then be repaid in instalments over a seven to ten-year period.

Russia

Russia paid foreign currency coupons on two Eurobonds, possibly averting default.

According to Reuters, Russia’s National Settlement Depository (NSD) successfully paid foreign currency coupons on two Eurobonds on Friday, a move that could mean Russia avoided another default.

More USD debt payments are due in June. Russia is still scrambling for cover.

US stocks

• US stocks finish the week on a high note, closing at session highs.
• The Dow has risen for six consecutive days. The S&P 500 and Nasdaq have risen for three days in a row.
• The major US stock indices closed the day at session highs, capping off a strong week following multi-week declines. The Dow ended an 8-week losing streak, while the S&P and Nasdaq ended 7-week losing streaks.
• Nasdaq has its best week in more than two months, Dow is up for the sixth day in a row & S&P and Nasdaq rose the final three days of the week and four of five days

The S&P 500 had its best week in 2022.

The catalyst was the expectation that inflation had peaked as a result of the housing market slowdown and other weaker data. Yields fell for the third week in a row. The market has priced in three rate hikes and is now expecting two. Bostic also stated that the Fed may pause and reevaluate in September.

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