Advantage Data: Copper mining, lodging among week's worst junk sectors; some retailers tops

By Paul Deckelman

New York, March 9 - A third straight week of mostly lower secondary activity across most high-yield industry sectors saw bonds of companies involved in copper mining, lodging, book and newspaper publishing and department and drug stores among the worst performers, along with financial areas such as securities dealers and real estate agents, according to statistics supplied to Prospect News by Advantage Data Inc.

For a third straight week, upsiders were scarce; among the relatively few standing out were several retailing sector areas - women's accessory and specialty stores, auto and home supply stores and hardware stores, as well as furniture manufacturing, particularly household furniture.

Of the 68 broad industry sectors into which Boston-based Advantage Data divides its high-yield universe, 49 showed declines in the week ended Friday versus 17 gains. That continued the trend seen the week before, when 50 sectors finished in the red, against 18 which ended in the black. In the latest week, two other sectors finished with flat readings showing neither a gain nor a loss on the week.

Lodging among top losers

The lodging sector, with an 8.91% decline, was the worst-performing broad-industry sector for the third time in the past four weeks.

Other notably underperforming broad-industry groupings included financial brokerages and exchanges, down 8.62%, particularly its securities dealers component subsector, which slid 11.78%, and another financial-oriented sector, real estate, which was down by 7.07% on the week, dragged down by the 11.49% decline in the real estate agents' subsector.

Other financial areas showing particular weakness included the non-bank personal credit institutions subsector, down 10.25%, and foreign banks and their U.S. branches, off by 6.23%.

The chemical manufacturing sector lost 6.06%, particularly in its plastics materials manufacturing component, down 10.88%, and electric and gas services, down 5.78%, with its electric utilities subsector in particular down 8.05%.

With most sectors and subsectors showing losses on the week, especially big losers among the latter included copper mining, which nosedived by 55.43%, miscellaneous industrial and commercial machinery, which plunged 28.06% and cement manufacturers, plummeting 16.55%.

Among textile and apparel manufacturing sector components, miscellaneous apparel and accessories fell 22.05%, while men's and boys' suit and coatmakers lost 14.97%.

Among retailers, the department stores subsector was down 11.27%, while women's clothing stores were off a nearly identical 11.30% and drugstore operators dipped by 9.86%.

Book publishers were down 10.36%, while newspaper publishers lost 9.28%.

Motor vehicle and parts manufacturers lost 7.22%, while residential builders retreated 3.03%.

Some retailers on rebound

Among the relatively few upsiders, several segments of the embattled retailing industry showed strength, among them women's accessory and specialty stores, which returned 9.09%, auto and home supply stores, up 6.15%, and hardware stores, returning 5.91%.

The latter subsector's gain lifted the building materials and hardware retailing broad-industry sector up 1.30% on the week - one of only three broad sectors in the index to finish with gains of 1% or more. The others were commercial fishing, up 1.56%, and the best performer on the week, furniture manufacturing, up 4.42%, led by a 7.78% rise in its household furnishings subgroup.

Among other industries whose bonds did relatively well were non-ferrous metal castings, up 4.51%, and trucking companies, up 3.35%. The textile manufacturing sector rose by 0.98%, with its carpet and rugs component up 2.23%.

Fishing, pipelines among best on year

On a year-to-date basis, the commercial fishing sector, again helped by its relatively strong weekly performance, remained the best-performing broad-industry group, returning 39.96% on the year, followed by energy pipelines, up 25.68%; food stores, up 16.44%, forestry companies, up 16.28%, miscellaneous manufacturing, up 14.99%, largely due to strong returns from companies making toys, sporting goods, jewelry and silverware; and insurance agents, up 12.84%.

Also strong year to date are movie theater operators, up 32.07%; producers of canned and frozen fruits and vegetables, up 20.66%; petroleum refiners, up 16.85%; agricultural chemical companies, up 20.35%; and death care companies, up 18.19%.

However, the best-year-to-date performance of any single sector or subsector belongs to iron mining, up 48.09% on the year.

Lodging leads laggards on year

On the downside, lodging, pulled lower by its big weekly loss, as noted, was the worst-performing broad industry sector year to date, down 26.11%.

Other industry areas whose big weekly losses, already noted, caused their year-to-date deficits to widen included men's and boys' suits and coats, down 79.46% on the year, the worst of any sector or subsector; miscellaneous apparel and accessories, down 66.98%, foreign-based banks, down 34.32%; personal credit institutions, down 29.79%, and cement manufacturers, down 28.25%.

Other subsectors showing big 2009 losses so far included metal forging and stamping, down 71.25%, electronic component and accessory manufacturers, down 31.68%, household furniture makers, down 31.71%, despite the sector's good showing on the week, and auto manufacturers, down 28.73%. Homebuilders are off 24.07% so far this year.

Market slides into the red

As of this past Friday, the overall domestic high-yield market, as measured by the widely followed Merrill Lynch High Yield Master II Index, was down 3.22% from the previous week, sliding into the red year to date with a 1.72% loss, versus the previous week's return of 1.55%.

The average Master II price of a high-yield issue stood at 59.25 as of Friday, with a spread of 1,843 basis points over comparable Treasuries and a yield to worst of 20.60% - versus a price of 61.00, a spread of 1,715 bps and a yield to worst of 19.43% the week before.

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