Rumors of Venezuelan President Hugo Chavez's death are back.
On Thursday, Vice President Nicolás Maduro, Chavez's likely
successor, took to Venezuelan television to ward off speculation
of the president's passing.
That came a day after CNN Chile, citing a Panamanian diplomat,
reported that Chavez had passed away
Maduro did say Chavez "is battling there for his health, for
his life, and we're accompanying him," according to The Atlantic.
While two months of ongoing health woes for Chavez may seem
ominous and increase speculation that the long-serving Venezuelan
leader is not alive, the headlines are not having much of an
impact on the
that hold debt issued by the South American nation.
That is a repeat of performances previously seen on
news of Chavez's frail condition
. In December when Chavez went to Cuba to receive cancer
treatment, bond ETFs with Venezuela exposure did not move much on
the news and that is the case again today.
For example, the iShares Emerging Markets High Yield Bond Fund
) is down fractionally on volume that appears poised to finish
below the daily average. The 11-month old iShares Emerging
Markets High Yield Bond Fund features a 17.45 percent weight to
Venezuela. That makes Venezuela the largest country weight in the
fund and EMHY the ETF with by far the largest exposure to the
While it may not be interesting that the Chavez speculation is
not doing much to impact EMHY, there are a couple of compelling
factoids pertaining to this ETF. First, the ETF's exposure to
Venezuela has increased by about 200 basis points since late
December. Second, despite all the chatter about the high-yield
bond market bubble on the cusp of bursting, EMHY's assets under
management tally has surged 33 percent in the past three
EMHY has an effective duration of 5.97 years and an average
yield to maturity of 6.04 percent,
according to iShares data
The Market Vectors LatAm Aggregate Bond ETF (NYSE:
), which features a 7.75 percent allocation to Venezuela, is up
by half a percent today. Like EMHY, BONO's volume is positioned
to be well below the daily average.
BONO's resistance to Venezuela news is not unusual. No
Venezuelan issues are featured among the ETF's top-10 holdings
and BONO has earned a reputation as being an avenue for
tapping less risky Latin American debt
, such as Mexican bonds. With an average effective duration of
6.35 years, BONO is another foreign bond ETF that has grown
rapidly. The fund spent much of last year with less than $10
million in assets, but now has almost $26 million.
The Market Vectors Emerging Markets High Yield Bond ETF (NYSE:
), the youngest of the three ETFs highlighted here, is off just a
penny today. HYEM had a weight of 7.75 percent to Venezuela at
the end of January, though that is down about 100 basis points
Two issues from Venezuela's state-run oil company, Petroleos
de Venezuela, are HYEM's largest and tenth-largest holdings,
respectively, but the ETF's performance today proves Chavez and
his country are not the tails that wag HYEM's dog.
Beyond Venezuela or any other geopolitical headwinds, HYEM is
another ETF that contradicts the notion that investors no long
favor high-yield debt. HYEM had $21.2 million in AUM in late
December, but now has over $43 million,
according to Market Vectors data
For more on Latin American bonds, click
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