Van Eck Int’l Corp. Junk ETF Launch Nears

March 30, 2012

 

Van Eck Global, the fund sponsor known for its natural resources investments, filed updated regulatory paperwork on its planned high-yield corporate bond ETF focused on both the developed and emerging markets and denominated in a number of major currencies. The new paperwork included the ticker and cost, suggesting launch is near.

The Market Vectors International High Yield Bond ETF (NYSEArca: IHY) will have a 0.40 percent annual expense ratio—including a 0.13 percent fee waiver through Sept. 1, 2013, the New York-based company said in the new filing with the Securities and Exchange Commission.

The plan for a high-yield international bond ETF comes at a time when U.S. investors are grappling with ultra-low interest rates that have prevailed since the stock market crashed in 2008. Finding fixed-income investments with decent yield has thus become more difficult, making high-yield bonds—especially those in emerging markets where interest rates tend to be higher than in developed markets—much more attractive.

The fund will hold publicly issued debt in U.S. and Canadian dollars, and British pounds that are issued in those and eurobond markets, according to the prospectus. The filing said the fund may include debt issued by companies in emerging market countries.

The debt held in the underlying BOFA Merrill Lynch Global Ex-US Issuers High Yield Constrained Index will be rated Ba1/BB+ or lower by either Moody’s or Standard & Poor’s, respectively, according to the filing. The taxable bonds in the index will have at least a year remaining before maturity.

Qualifying securities must have a fixed-coupon schedule and a minimum amount outstanding of $100 million, €100 million, £50 million or C$100 million.

Eurodollar bonds—U.S. dollar bonds not issued in the U.S. domestic market—and Rule 144A securities, both with and without registration rights, qualify for inclusion in the index. Original-issue zero-coupon bonds and payment-in-kind securities, including toggle notes, also qualify for inclusion, according to the filing, which was dated March 29.

 

 

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