Market Vectors’ international high-yield corporate debt portfolio manager Fran Rodilosso, manager of three Market Vectors high yield-corporate bond ETFs, has spoken out on the possible consequences of new Eurobond issuance for debt-ridden countries in the Eurozone, corporate credit markets and investors in high-yield offerings.
“It seems ironic to me to explore new ways to issue sovereign debt in order to help alleviate a sovereign debt crisis,” says Rodilosso. “But the goal of lowering the cost of debt for peripheral Eurozone nations such as Italy, Spain and Greece would obviously have merit if such efforts help those countries remain solvent and avoid a far deeper crisis.
“The main positive I see in the Eurobond discussion relates to what would have to happen in order for the concept to become a reality. I believe a shared will, renewed commitments to fiscal discipline, and an equitable system of guarantees would have to be in place before Germany or the market itself would back such an issuance. These positive developments may represent a distinctly different course than the one the market seems to fear we are currently headed.”
Rodilosso also believes that: “For corporate credit markets, the development of a Eurobond curve would be a very interesting one, and could ultimately provide a new benchmark against which to price. Politically, this idea may be far from gaining traction, but I believe that it is certainly one worth following.”
Rodilosso joined the Market Vectors team earlier this year bringing with him more than 20 years of senior-level experience in emerging market, high yield debt research and portfolio management. He currently manages the Fallen Angel High Yield Bond ETF (NYSE Arca: ANGL), International High Yield Bond ETF (NYSE Arca: IHY) and the most recent addition to this fund family, Emerging Markets High Yield Bond ETF (NYSE Arca: HYEM).
