Advantage Data: Junk major sectors' rise continues; coal mining best, food stores worst

By Paul Deckelman

New York, Feb. 24 - The high-yield market posted gains for a third consecutive week, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc. During the week ended Friday, junk continued to shake off the rare loss seen in the week ended Jan. 31.

That earlier downturn had not only been its first weekly loss for 2014 but had also snapped a winning streak before that of four consecutive weeks since the beginning of the year and 11 straight weeks of gains dating back to early November of 2013. Since the beginning of the year, gains have now been seen in seven weeks, versus the one downturn.

In the latest week, 55 out of the 58 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe finished in the black, with only three sectors ending in the red.

That maintained the status quo seen the week before, ended Feb. 14, when 56 sectors out of the 58 measured posted gains, with just two other sectors showing losses.

The same stability was seen in the behavior of the 30 most significantly sized sectors, as measured by the number of bond issuers, the collective number of issues tracked and their total face amount outstanding. In the latest week, all 30 of those sectors closed in the black, with none in the red. In the previous week, 29 of those major sectors had closed in positive territory with just one showing a negative return.

In the latest week, coal mining was the best performer among the significantly sized sectors, while food stores was the worst.

Printing and publishing remained the best performer among the major sectors so far on the year, while coal - despite its strong showing on the week - was still the worst year-to-date performer.

Index rise rolls on

Statistical indicators of general market performance meanwhile were mixed across the board versus the previous Friday, after having been higher the previous week.

However, the total year-to-date return, as measured by the widely followed Merrill Lynch High Yield Master II index, posted its third weekly gain after two straight weekly losses, rising by 0.52%. That followed a 0.547% rise in the week ended Feb. 14, on top of the previous week's 0.248% improvement.

Those gains stood in contrast to the 0.032% downturn seen in the week ended Jan. 31 and a 0.283% retreat recorded in the week ended Jan. 24, which in turn had snapped a streak of 10 consecutive Fridays during which the index had finished higher than the previous Friday, dating back to the week ended Nov. 15, 2013.

The index has now seen six weekly gains in 2014, against that pair of losses. In 2013, the index showed 33 weekly gains against 19 losses, versus 2012, when it notched 40 gains and 12 losses.

As of Friday, the index's year-to-date return had firmed to 2.07% - its ninth consecutive new high point for 2014 so far and first close over the 2% level. It was up from 1.542% the previous Friday. In 2013, the index had ended at 7.419%, its high point for the year, although that was well down from the 15.583% reading at which it had ended 2012.

Among its other components, the index showed an average price of 104.4211 on Friday, up from 104.0076. Friday's level was its highest point for the year so far, in contrast with its low for the year so far of 103.24599, set on Feb. 4. It was also up from 103.3161, where it had ended 2013.

Its yield to worst stood at 5.329%, its new low point for the year. That was down from the previous Friday's 5.47%, well down from its high for the year of 5.735%, set on Feb. 4, and down as well from 5.671% at the end of 2013.

The index's spread to worst over comparable Treasury issues stood at 404 basis points, considerably tighter than the previous Friday's 416 bps and much tighter still than its wide point for the year so far, 444 bps, set on Feb. 4. It remained wide of the 398 bps notched on Jan. 22, its tightest level for 2014. The spread had been 418 bps on the last day of 2013.

Coal comes back

Back on a sector-by-sector basis, Advantage Data meanwhile showed the bonds of coal-mining companies (up 0.80%) with the best performance among any of the significantly sized sectors.

Also showing strength were oil and natural gas exploration and production (up 0.60%), chemical manufacturing (up 0.58%) and the telecommunications and transportation equipment manufacturing sectors, both of which were up by 0.55%.

It was the second straight week among the Top Five best-performing major sectors for the energy E&P and the telecom groupings, which had been there the previous week with returns of 0.60% and 0.67%, respectively.

And the latest results represented a solid improvement for the chemical makers and the transportation equipment producers, both of whom had been among the Bottom Five worst-performing sectors the prior week, each returning a sedate 0.22%.

There meanwhile was no downside as such this past week, with all of the significantly sized sectors having finished in the black, as noted.

The Bottom Five was therefore filled with sectors whose returns were only considerably smaller than their peers. These included food stores (up 0.05%), lodging and miscellaneous retailing (both up 0.08%), automotive services (up 0.22%) and food manufacturing (up 0.23%). The food stores had been among the best-performing sectors the previous week with a 0.63% return.

Printers stay strong on year

With eight weeks in the books for 2014 so far, printing and publishing (up 5.02%) was the best year-to-date performer among the significantly sized sectors for a fourth week in a row.

Petroleum refining (up 3.52% on the year so far) strengthened enough to grab the runner-up spot in the standings, despite having not been among the leaders the week before.

Health care (up 3.10%) held third place for a second consecutive week, with paper manufacturing (up 3.08%) having fallen two notches to fourth-best, after previously having been the second-best sector for three straight weeks. Number-five telecommunications (up 2.61%) held down that slot for a second straight week.

On the downside, the coal mining sector remained the worst year-to-date major sector for a fourth consecutive week, although its strong showing for the week, as noted, pulled its year-to-date return back into the black (up 0.32%) after several previous weeks of cumulative red ink.

Rounding out the year-to-date underachievers were second-worst miscellaneous retailing (up 0.85%), third-worst food manufacturing (up 1.13%), fourth-worst real estate (up 1.19%) and tied for fifth-worst, the automotive services and metals mining sectors, each of which was up by 1.23% for the year so far.

It was the second straight week that the food manufacturers were third-worst, while automotive services improved by one position, relatively speaking, after having been fourth-worst for a second straight week the week before. The other sectors had not been among the worst laggards in that previous week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.