Market Vectors' Fran Rodilosso on High Yield Bond Indexes Breaching the Five Percent Yield Barrier

Market Vectors' Fran Rodilosso on High Yield Bond Indexes Breaching the Five Percent Yield Barrier

NEW YORK--(BUSINESS WIRE)-- Yields* on U.S. high-yield bond indexes continue to decline, dipping below five percent not long after breaching the six percent barrier, driven by unprecedented demand and heavily influenced by the $80 billion in other fixed income assets being purchased by the Federal Reserve each month, according to Fran Rodilosso, Fixed Income Portfolio Manager at Market Vectors ETFs.

"The liquidity measures undertaken by the Bank of Japan (BOJ) and the recent rate cut by the European Central Bank (ECB) have added to the sense that the interest rate side of the equation is not going to reverse soon," said Rodilosso. "As for the credit spread component, at 424 basis points on the Merrill Lynch High Yield Master II Index (H0A0), it remains 184 basis points above the tight levels reached in 2007, as of yesterday. This credit spread is actually high in comparison with other periods when default rates were as low as they are currently, which is around 3 percent."


Opportunities for diversification still exist though, according to Rodilosso, who added, "Emerging markets high yield provides an interesting diversifier. The Merrill Lynch Emerging Markets High Yield Liquid Corporate Plus Index (HXUS), an all U.S. dollar index of high-yield bonds from issuers based in emerging markets, still has a yield-to-worst of 6.38 percent."

"Despite the sense of foreboding that has accompanied the recent rally in U.S. and emerging markets high yield debt, slower but positive growth and low interest rates have been a very positive backdrop for high yield," continued Rodilosso. "There have been fundamental justifications for the rally in high yield," he added, "to go along with the incredibly strong technical situation created by central banks."

Rodilosso concluded by adding, "I feel we are almost certain to see more issuance this year than anyone anticipated. The question will be whether or not companies are judicious in their borrowing - are they refinancing at lower rates, pushing out maturities, and otherwise improving their capital position? That behavior describes much of the heavy new issuance the last couple of years in the U.S., Europe and emerging markets."

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 Emerging Markets High Yield Bond ETF (NYSE Arca: HYEM), Fallen Angel High Yield Bond ETF (NYSE Arca: ANGL),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.

*Yield-to-Worst measures the lowest of either yield-to-maturity or yield-to-call date on every possible call date.

Index returns assume the reinvestment of all income and do not reflect any management fees or brokerage expenses associated with Fund returns. Investors cannot invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses.

BofA Merrill Lynch U.S. High Yield Master II Index (H0A0) is comprised of below investment grade corporate bonds (based on an average of Moody's, S&P and Fitch) denominated in U.S. dollars.

BofA Merrill Lynch High Yield US Emerging Markets Liquid Corporate Plus Index (HXUS) is comprised of U.S. dollar-denominated bonds issued by non-sovereign emerging markets issuers that are rated below investment grade and issued in the major domestic or Eurobond markets.

BofA Merrill Lynch High Yield US Emerging Markets Liquid Corporate Plus Index (HXUS) is comprised of U.S. dollar-denominated bonds issued by non-sovereign emerging markets issuers that are rated below investment grade and issued in the major domestic or Eurobond markets.

HXUS is the underlying index for Market Vectors Emerging Markets High Yield Bond ETF (HYEM). Please note that the performance of HXUS is not, nor is it intended to predict or suggest, the performance of HYEM.

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 $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.

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.

Diversification does not assure a profit nor does it protect against a loss.

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 the prospectus and summary prospectus carefully before investing.

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