Advantage Data: Publishing, real estate tops amid key-sector gains last week, food stores falter

By Paul Deckelman

New York, Dec. 20 - The high-yield market continued its rebound from a recent bout of weakness in the week ended Friday, according to weekly industrial-sector bond-performance statistics supplied to Prospect News by Advantage Data Inc.

Bond market performance improved for a third consecutive week, matching the previous three straight weeks on the downside dating back to the week ended Nov. 12. Gaining sectors have now outpolled losing sectors in 16 weeks out of the last 20 and in 22 weeks out of the last 27.

Some 45 of the 73 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe finished in the black in the latest week, with 26 ending in the red and two - tobacco manufacturing and health care services - showing a flat 0.00% reading on the week, indicating neither a gain nor a loss. That extended, though with lessened conviction, the bullish trend seen the previous week, ended Dec. 10, when 56 sectors put up positive results and 17 had negative returns.

Among the 30 most significantly sized sectors, as measured by the number of issuers, the collective number of issues tracked and their total face amount, 21 ended in the black this week, against eight finishing in the red and one - health care, as mentioned - putting up unchanged results. That continued the positive trend seen the week before, when 24 of the sectors posted positive returns and six finished with negative results.

The best performer among the major sectors this past week was publishing, while real estate, business services and coal mining also showed some strength.

On the downside, food stores were clearly the weakest performers, along with miscellaneous retailers and amusement operators also underperforming.

On a statistical basis, for a third straight week, the junk market's year-to-date performance, as measured by the widely followed Merrill Lynch High Yield Master II index, topped its reading seen at the end of the previous week.

Publishing pops, food drops

Among specific significantly sized sectors, the single best finisher this past week was publishing, with a 1.06% return. That was followed by real estate (up 0.86%), business services (up 0.48%), coal mining (up 0.46%), electronics manufacturing (up 0.36%) and insurance carriers (up 0.32%).

It was the fourth consecutive session among the elite finishers for real estate and the second in a row for coal mining; in the previous week, they had returned 1.16% and 0.60%, respectively. The insurers, meantime, had spent the previous week among the worst performers for a fourth straight time, and in fact, had been the single worst-finishing major group that week with a 1.25% loss.

On the downside, food stores fell by 0.58%, the worst of any major sector, followed by miscellaneous retailing (down 0.27%), amusement (down 0.26%), telecommunications (down 0.16%), oil and gas exploration, drilling and production (down 0.14%) and electric and gas services (down 0.12%).

It was the second straight week among the underachievers for the food stores and the third in a row for the electric and gas utilities, which had posted losses of 0.41% and 0.48%, respectively, the previous week. It was also a sharp deterioration for amusement, which had been among the better performers over the previous two weeks, including the Dec. 10 week, when the group gained 0.67%.

Financials top yearly results

As has been the case for most of the year, financial sectors generally continued to show the strongest performance among the significantly sized sectors on a year-to-date basis, led by the bonds of insurance carriers (up 29.02%), depository financial institutions (up 19.32%), non-depository institutions (up 18.62%), real estate (up 17.53%), brokers and exchanges (up 16.64%) and investment and holding offices (up 13.13%).

Other notable cumulative gainers among the majors with 50 weeks now in the books and two to go on the year include the bonds of electronics manufacturers (up 16.39%), transportation equipment makers (up 16.24%), amusement providers (up 14.57%), publishing, the week's big winner, (up 14.43%), lodging (up 13.56%) and metals miners (up 13.07%).

As has been the case since mid-June, no significantly sized sectors were in the red on a cumulative basis this past week.

Bonds of food stores, the week's big loser (up 5.10%), electric and gas services (up 8.10%), chemical manufacturers (up 8.87%), precision instruments makers (up 9.44%), miscellaneous retailing (up 9.73%) and automotive services (up 9.84%) have had only relatively modest year-to-date net advances, anchored in the single digits on a percentage basis.

Key market indicator gains

Looking at the overall domestic high-yield market, junk bonds, as measured by the Merrill Lynch High Yield Master II Index, continued for a third straight week to come back from their recent slump, rising 0.022% for the period, on top of the 0.303% return the week before.

The index's year-to-date return as of Friday stood at 14.185% - up from 14.159% at the end of the previous week, although it remained well off its 2010 peak level of 15.602%, set on Tuesday, Nov. 9. The index's low for the year, meantime, was a 0.357% loss recorded in the week ended Feb. 12.

The average price of a high-yield issue covered by the Master II stood at 101.127 at Friday's close, with a yield to worst of 7.60% and a spread to worst of 570 basis points over comparable Treasuries, versus a price of 101.263, a yield of 7.62% and a spread of 570 bps at the end of the previous week.

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