Market Vectors' Fran Rodilosso on Dish Network's Surprise Bid for Sprint Nextel and What It Might Mean for Fixed Income Investors

On Monday, Dish Network announced that it had made a $25.5 billion bid for Sprint Nextel, the third largest wireless carrier in the U.S. and currently the second largest issuer weight (6.3%) in the BofA Merrill Lynch US Fallen Angel High Yield Index (H0FA) that underlies the Market Vectors Fallen Angel High Yield Bond ETF (NYSE Arca: ANGL). The approach detailed by Dish seeks to derail a planned takeover of Sprint Nextel by Japan’s SoftBank. This comes at a time when Sprint Nextel needs to make some key decisions about the company’s future, according to Fran Rodilosso, Fixed Income Portfolio Manager at Market Vectors ETFs.

“Sprint Nextel’s stock and bonds are up significantly from where they were one year ago, and are, in fact, far ahead of the market in both cases,” said Rodilosso. “However, the company will be hard-pressed to continue to compete with the top two firms in the industry, AT&T and Verizon, as a standalone at this point. This is why both of these potential deals may be appealing to investors versus the alternative of doing nothing and potentially losing market share.”

“Dish does not have the deep pockets of Softbank, and so a Dish deal would likely be a more highly leveraged one,” added Rodilosso. “But Dish has been stockpiling cash, ostensibly to help fund an acquisition.”

Rodilosso also noted that Sprint bonds have sold off, though not dramatically, following Monday’s announcement as investors continue to weigh the possible outcome of this still-developing situation.

“SoftBank may have more cash on hand to deploy as part of any deal, but Dish arguably brings more to the table, in the form of content and the ability to deliver consumers a fully integrated menu of service offerings,” said Rodilosso. “A combined Dish/Sprint Nextel entity might be better able to compete in the challenging U.S. wireless market.”

“In my opinion, it is unlikely that this bid is the final one,” he added. “Any escalation of the price for Sprint adds a little more leverage to the final equation, therefore the situation around this ‘fallen angel’ will continue to bear watching for some time.”

Mr. Rodilosso has 20 years of experience trading and managing risk in fixed income investment strategies, including 17 years covering emerging markets. In addition to ANGL, among the Market Vectors ETFs under his watch are Emerging Markets High Yield Bond ETF (NYSE Arca: HYEM), International High Yield Bond ETF (NYSE Arca: IHY), Investment Grade Floating Rate ETF (NYSE Arca: FLTR), LatAm Aggregate Bond ETF (NYSE Arca: BONO), Emerging Markets Local Currency Bond ETF (NYSE Arca: EMLC), Renminbi Bond ETF (NYSE Arca: CHLC), and Treasury-Hedged High Yield Bond ETF (NYSE Arca: THHY). As of March 31, 2013, the total assets for these ETFs amounted to approximately $1.9 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 is 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 totaled $26.1 billion in assets under management, making it the fifth largest ETP family in the U.S. and ninth largest worldwide as of March 31, 2013.

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 managed approximately $35 billion in investor assets as of March 31, 2013.

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BofA Merrill Lynch US Fallen Angel High Yield Index (H0FA) is comprised of below-investment grade corporate bonds denominated in U.S. dollars that were rated investment grade at the time of issuance.

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