Advantage Data: Electronics, food stores worst as major sectors slide

By Paul Deckelman

New York, June 4 - The high-yield market was once again struggling last week, according to sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

That data showed a majority of the sectors lapsing after having gotten back in the black in the previous week, ended May 25 - which in turn had followed a sharp downturn seen the week before that, ended May 18.

With the latest week's downturn, losses have now been seen in two weeks out of the last three and in three weeks out of the last eight. On a longer-term basis, though, there have been just four losses in the 22 completed weeks since the start of the year.

Of the 72 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe, 49 finished in the red last week, 18 ended in the black, one sector was unchanged, showing neither a gain or a loss and four other sectors did not generate sufficient activity to produce any kind of a number.

That represented a sharp deterioration from the positive result which had been seen the previous week, when 40 sectors finished higher, 25 were lower, two sectors had flat 0.00% readings and five additional sectors showed no activity.

Mirroring the pattern seen in the overall high-yield universe, 23 out 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 - ended in the red this week and just seven finished in the black.

That also represented a sharp reversal from the prior week, when 17 sectors had showed gains, against 11 losses and the two unchanged sectors, which showed neither a gain nor a loss.

Among specific major sectors in the latest week, bonds of electronics manufacturers, food store operators and miscellaneous retailers had the worst showings.

On the upside, insurance carriers and real estate concerns did the best.

Statistical indicators of general market performance were down across the board on the week, while junk's total year-to-date return, as measured by the widely followed Merrill Lynch High Yield Master II index, fell for a fourth consecutive week.

Index continues retreat

The Merrill Lynch index showed junk bonds with a one-week decline of 0.448% as of the close Friday, on top of the previous week's 0.245% loss. Besides being the fourth straight loss, it was the seventh weekly loss so far this year.

The latest week's retreat left the index's year-to-date return at 4.448% on Friday, down from 4.851% a week earlier and well below the peak level for 2012 of 6.80%, established on May 7. Friday's reading was the lowest year-to-date level since the 4.29% recorded on Feb. 22.

Other components of the Merrill Lynch index were also off on the week. As of Friday, the index showed an average price of 98.732, a yield to worst of 7.945% and a spread to worst of 718 basis points over comparable Treasuries, versus the previous week's price of 99.779, a yield of 7.554% and a spread of 668 bps.

Electronics shorts out

Back on a sector basis, Advantage Data meanwhile showed bonds of electronics manufacturers, food store operators and miscellaneous retailers turning in the worst performance among the significantly sized sectors.

Electronics manufacturing was off by 0.79% on the week, its second straight time among the Bottom Five major-sector performers. The sector had been down 0.22% the week before.

Other sectors showing weakness in the latest week were food stores (down 0.74%), closely followed by miscellaneous retailing (down 0.73%), as well as coal mining (down 0.63%) and petroleum refining (down 0.56%).

It was the third consecutive week among the underachievers for coal mining, which had the worst showing of any significantly-sized group the week before, when it plunged by 2.87%, the only really sharp drop among those key sectors, and its second consecutive cave-in of more than 2 full percentage points.

On the upside, insurance carriers did the best among the major sectors, rising 0.31%. The week before, the grouping had been among the two unchanged sectors.

Other sectors showing relative strength included real estate (up 0.21%), food manufacturing (up 0.17%), electric and gas services (up 0.14%) and paper manufacturing (up 0.10%).

It was the second straight week among the elite finishers for real estate, which had been there the previous week as well with a 0.73% gain. The papermakers, like insurance, had been unchanged the week before.

Construction back on top

Twenty-two weeks into 2012, building construction was once more the best-performing sector on a year-to-date basis (up 10.58%), the second time in three weeks the sector has held that lofty perch. Real estate, which previously had been on top in 15 weeks out of the prior 17, was the runner-up this past week, with a 10.30% return.

Not too far back were insurance carriers (up 8.39%) and depository financial institutions (up 8.30%).

On the downside, coal was the only major-sized sector in negative territory for the year so far, showing a 4.81% loss.

Others posting just relatively modest gains on a cumulative basis included oil and gas exploration and production (up 2.67%), and petroleum refining (up 3.07%), miscellaneous retailing (up 3.63%) and telecommunications (up 3.70%).

© 2015 Prospect News.
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