B of A High Yield Large-Cap Index in first loss after 8-week surge, down 0.33%;

By Paul Deckelman

New York, Dec. 17 - The Banc of America High Yield Large Cap Index's eight-week long winning streak came to an abrupt end in the week ended Thursday Dec. 12, as the junk bond market measure declined 0.33%. That contrasted with the 0.18% rise seen in the previous week.

The High Yield Large Cap Index's year-to-date loss - which had steadily fallen all the way down to 3.97% in the week ended Dec. 5 from the year's-high cumulative loss of 15.68% seen in the week ended Oct. 10 - widened back out to 4.29% in the most recent week.

The index's spread over Treasuries and yield-to-worst both also widened out in the most recent week to 974 basis points and 12.93%, respectively (versus 952 basis points and 12.83% in the previous week).

Before the winning streak ended, the steady gains seen over that eight-week span had gone a long way toward bringing the index's performance for the year more closely into line with its showing at the end of 2001, when the B of A market measure suffered an approximate 3% loss for the full year. The spread at the end of 2001 was somewhat over 900 basis points off Treasuries and its year-end yield-to-worst was above 13.50%.

Banc of America sees the index, which tracks issues of $300 million and over, as a reliable barometer of trends in the overall high yield market of over $500 billion.

The bank's High Yield Broad Market Index, which includes issues of $100 million or more, meantime, also was in retreat in the most recent week, declining 0.13% with a spread of 982 basis points and a 12.85% yield-to-worst, versus the previous week's gain of 0.28%, its 971 basis points spread and 12.87% yield-to-worst.

The HY Broad Market Index's year-to-date performance declined slightly to a 0.40% return from 0.53% the week before. In late November, the cumulative measure had swung back into the black after several months of having shown a loss.

Breaking with the clear trend which had been seen in recent weeks, when almost all of the industry sectors into which B of A divides its HY Broad Market Index showing positive results, sectors were almost evenly split between advancers and decliners in the most recent week.

The biggest loser was technology, down 1.63% as Lucent Technologies Inc. and Amkor Technologies came off their recent rallies, with Lucent's 6.45% notes due 2029 off 2½ points to end at 42, while Amkor's 9¼% notes due 2006 lost 2¼ points to end at 89. In the previous week, the techs had also been on the Bottom Five list of the worst-performing sectors with an identical 1.63% decline, while transportation issues had been the absolute worst, down 3.49%.

Satellite services lost 1.16% in the most recent week, led by a retreat in the bonds of PanAmSat Corp., whose 8½% notes due 2012 were 1½ points lower at 96 after EchoStar DBS terminated its planned acquisition of General Motors Corp.'s Hughes Electronics Corp. unit, which also allowed it to back out of a commitment to purchase Hughes' 81% stake in PanAmSat. It was a repeat performance for the satellite grouping, which had also ended up among the Bottom Five the week before, when it lost 0.80%.

PCS/cellular operators (off 1.13% as Nextel Communications Inc.'s bonds were down a point or so and weakness was also seen in such issues as Crown Castle International Corp. and Triton PCS Inc.), domestic wireline telecommunications companies (off 1.05%) and business services (behind 0.87%) rounded out the Bottom Five list for the most recent week; the PCS/cellular sector had also been in the Bottom Five the week before, when it rose a paltry 0.04% (versus much bigger gains for most other sectors), while the domestic wirelines had been on the Top Five list of the strongest performers with a 1.58% gain.

On the upside in the week ended Thursday, international cable operators posted an index-best 1.96% gain as United Pan-Europe Communications NV's bonds, like its zero-coupon/12.5% senior discount notes due 2009, rose two points after the Amsterdam-based cabler filed for bankruptcy protection and predicted it would emerge from reorganization in March. The international cable group had also been the best performer the week before, when it rose 2.96%.

Utilities were the second-strongest grouping in the most recent week, up 0.86% largely on the strength of AES Corp debt, after the global power producer completed the refinancing of $2.1 billion in bank loans and bonds. AES' 8½% notes due 2007 were up four points to 33, while its 9½% notes due 2009 were two points better, at 51. Calpine Corp. bonds were up as well, with its 7 7/8% notes due 2008 up nearly three points to end at 43. The utilities had been among the worst performers the week before, when they were down 0.44%.

Steel issues (up 0.52%, pulled up by a four-point gain in WCI Steel Inc.'s 10% notes due 2004), publishing (up 0.51%) and advertising-dependent media (up 0.48%) rounded out the Top Five in the week ended Thursday; publishing had also been there the week before, with an 0.87% advance.

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