Mexico's Proposed Telecommunications Reforms a Positive Sign for High Yield Investors, Says Market Vectors' Fran Rodilosso
NEW YORK--(BUSINESS WIRE)-- Earlier this week, Mexican President Enrique Peña Nieto sent a bill to the Mexican Congress which, if it becomes law, would bring about major reforms in the Mexican telecommunications industry, including the introduction of greater governmental powers to combat monopolies and rules which could ease the path for more foreign investments. This news should be encouraging for investors for a number of key reasons, according to Fran Rodilosso, Fixed Income Portfolio Manager at Market Vectors ETFs.
"These proposed reforms are the latest in a recent series of encouraging signs that we have seen coming out of Mexico. The new administration has an aggressive reform agenda, and the proposed telecommunications reform is a positive sign of its willingness to take on some of the most powerful business interests in the country," said Rodilosso. "As a long-time investor in high-yield emerging market bonds, I have seen how the market has treated the 'also-rans' in Mexico's telephony and broadcasting industries; companies whose ability to compete in that country has at times seemed to be at the whim of the dominant players or the courts. Even last year, a smaller fixed line competitor lost important rulings on fees that severely hurt its profitability. In my view, this type of reform could level the playing field somewhat and open up some of these companies to foreign ownership."
"Of course, if this bill passes and becomes law, the question remains of its effectiveness," continued Rodilosso. "The courts have historically been friendly towards Mexico's dominant companies and politically ingrained elites. Even the recent pro-creditor ruling on the Mexican bankruptcy case involving Vitro SAB happened on U.S. soil. If Vitro did not have U.S. subsidiaries, then creditors would have been left with very little leverage to combat the company's reorganization plan was approved in local courts."
"In my opinion, there are a variety of risks associated with investing in the small market, mostly fixed line, operators in Mexico. But the movement towards reform at this early stage in President Peña Nieto's administration should be seen as an encouraging step in opening up the competitive landscape to potentially more foreign ownership," he added.
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 areInvestment Grade Floating Rate ETF (NYSE Arca: FLTR), 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), and Renminbi Bond ETF (NYSE Arca: CHLC). As of December 31, 2012, the total assets for these ETFs amounted to approximately $1.4 billion.
Van Eck Associates Corporation does not provide tax, legal or accounting advice. Investors should discuss their individual circumstances with appropriate professionals before making any decisions.
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 $27.6 billion in assets under management, making it the fifth largest ETP family in the U.S. and eighth largest worldwide as of December 31, 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 managed approximately $36.6 billion in investor assets as of December 31, 2012.
There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. Debt securities carry interest rate and credit risk. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. The Funds' underlying securities may be subject to call risk, which may result in the Funds having to reinvest the proceeds at lower interest rates, resulting in a decline in the Funds' income.
The Funds may be subject to credit risk, interest rate risk and a greater risk of loss of income and principal than those holding higher rated securities. As the Funds may invest in securities denominated in foreign currencies and some of the income received by the Funds may be in foreign currency, changes in currency exchange rates may negatively impact the Funds' returns. Investments in emerging markets securities are subject to elevated risks which include, among others, expropriation, confiscatory taxation, issues with repatriation of investment income, limitations of foreign ownership, political instability, armed conflict and social instability. Investors should be willing to accept a high degree of volatility and the potential of significant loss. The Funds may loan their securities, which may subject them to additional credit and counterparty risk. For a more complete description of these and other risks, please refer to the Funds' prospectus and summary prospectus.
The "net asset value" (NAV) of an ETF is determined at the close of each business day, and represents the dollar value of one share of the ETF; it is calculated by taking the total assets of an ETF subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as an ETF's intraday trading value. Investors should not expect to buy or sell shares at NAV. Total returns are based upon closing "market price" (price) of the ETF on the dates listed.
Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called "creation units" and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market.
Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise.An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 888.MKT.VCTR or visit vaneck.com/etf. Please read theprospectusandsummary prospectuscarefully before investing.
Van Eck Securities Corporation, Distributor
335 Madison Avenue, New York, NY 10017
Mike MacMillan/Chris Sullivan, 212-473-4442
KEYWORDS: United States North America New York
The article Mexico's Proposed Telecommunications Reforms a Positive Sign for High Yield Investors, Says Market Vectors' Fran Rodilosso originally appeared on Fool.com.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.