Market Vectors’ Fran Rodilosso on Uncertainty and Market Sentiment Surrounding Venezuelan Debt
Venezuelan President Hugo Chavez continues to battle serious health
problems, according to a number of recent news reports, and questions as
to whether he will be able to attend his own inauguration, scheduled for
next week, or even how much longer he may have to live, have set off a
round of uncertainty for investors in Venezuelan sovereign bonds,
according to Fran
Rodilosso, fixed income portfolio manager at Market Vectors ETFs.
“At this point, I think one must assume that Chavez will not return from
Cuba in time for his inauguration, and perhaps may not return at all,”
says Rodilosso. “If a miracle of sorts does occur, and Chavez does
return, bringing back some aspect of status quo, the most recent rally
in Venezuelan debt will most likely unwind. But I think the market
should find a floor before too long since it has, over the last 14
years, come to accept that Chavez, no matter how he governs, has for the
moment demonstrated both the ability and willingness to pay his
country’s debts.”
“Still, reports of the imminent death of Chavez, exaggerated or not,
have added a large amount of upward volatility to the market,” added
Rodilosso.
“What is concerning though, is that there is a process that must take
place if and when Chavez becomes officially unfit to serve. Are the
country’s institutions strong enough to withstand the possibility of
some form of constitutional crisis? I am not sure we know that answer.
But I think the consensus is that what ultimately emerges, be that
Chavez’s current Vice President, Nicolas Maduro, or a leader from the
opposition, raises the possibility of policy changes and even
potentially an improved relationship with the U.S. An extended period of
uncertainty about succession may lead to buying opportunities at lower
levels. Ultimately, the market is telling us that a better governed
Venezuela would potentially be a stronger credit,” Rodilosso said.
Mr. Rodilosso has 20 years of experience trading and managing risk in
fixed income investment strategies, including 17 years covering emerging
markets. Among the Market Vectors ETFs under his watch are Fallen
Angel High Yield Bond ETF (NYSE Arca: ANGL), LatAm
Aggregate Bond ETF (NYSE Arca: BONO), Emerging
Markets Local Currency Bond ETF (NYSE Arca: EMLC), Emerging
Markets High Yield Bond ETF (NYSE Arca: HYEM), International
High Yield Bond ETF (NYSE Arca: IHY), Renminbi
Bond ETF (NYSE Arca: CHLC) and Investment
Grade Floating Rate ETF (NYSE Arca: FLTR). As of December 30, 2012,
the total assets for these ETFs amounted to approximately $1.4 billion.
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Please note that the information herein represents the opinion of the
portfolio manager and these opinions may change at any time and from
time to time. This not a recommendation to buy or sell any security nor
is it intended to be a forecast of future events, a guarantee of future
results or investment advice. Current market conditions may not
continue. Non-Van Eck Global proprietary information contained herein
has been obtained from sources believed to be reliable, but not
guaranteed.
About Market Vectors ETFs
Market Vectors exchange-traded products have been offered since 2006 and
span many asset classes, including equities, fixed income (municipal and
international bonds) and currency markets. The Market Vectors family
totals $27.9 billion in assets under management, making it the fifth
largest ETP family in the U.S. and eighth largest worldwide as of
September 30, 2012.
Market Vectors ETFs are sponsored by Van Eck Global. Founded in 1955,
Van Eck Global was among the first U.S. money managers helping investors
achieve greater diversification through global investing. Today, the
firm continues this tradition by offering innovative, actively managed
investment choices in hard assets, emerging markets, precious metals
including gold, and other alternative asset classes. Van Eck Global has
offices around the world and manages approximately $37.8 billion in
investor assets as of September 30, 2012.
There are risks involved with investing in ETFs, including possible loss
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