Advantage Data: Junk sectors post fifth straight gain after loss, now up in nine of last 10 weeks

By Paul Deckelman

New York, June 19 – The junk bond market continued to advance last week, ended June 16, posting its fifth consecutive weekly gain, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

The sectors maintained their recent pattern of renewed strength after having been mostly lower a bit more than a month ago, during the week ended May 12, which had been their first loss after six consecutive weeks before that on the upside, dating back to the week ended March 31.

Last week marked the sectors’ ninth positive week out of the last 10 weeks, dating back to the week ended April 14.

While the sectors had seen smooth sailing throughout April, after a mostly choppy March of alternating up and down weeks, things turned more turbulent for the first part of May before finally calming down in the latter part of the month and then on into June.

A subset consisting of the 33 largest sectors (out of the total of 61 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe), as measured by the number of bond issuers, the collective number of issues tracked and their total face amount outstanding, showed 26 of those sectors ending in the black last week, with seven sectors in the red.

That represented something of an improvement from the week before, ended June 9, when 22 of those sectors had posted gains and 11 had notched losses, although it was still not as strong as the week before that, ended June 2, when fully 30 of those key sectors had finished in positive territory, with just three sectors in negative territory.

During the most recent downside week, ended May 12, some 20 of the sizable sectors had suffered losses, 11 recorded gains and two others showed neither a gain nor a loss on the week.

Among specific large-sized sectors during the June 16 week, the volatile automotive services sector was the top performer – after having had the biggest loss the week before – while food stores did the exact opposite, posting the biggest loss after having led all of the sectors the previous week.

On a year-to-date basis, with 24 weeks of 2017 now in the books, health care had the best cumulative showing for a third straight week, while oil and natural gas extraction did the worst for the year to date, after four straight weeks of automotive services having had that unwanted honor.

Autos go from worst to first

Among the specific large-sized sectors, automotive services, as noted, was the top finisher among the large-sized sectors last week, gaining 1.10%.

The sector, largely consisting of vehicle-rental companies such as Hertz Corp. and Avis Budget Group Inc., accomplished the relatively uncommon feat of traveling all the way to the top last week after having had the worst showing among the larger sectors during the June 9 week, when it lost 1.88%.

Underscoring the sector’s extreme changeability, the sector had also been among the Top Five best-performing large-sized sectors in both of the two weeks before that, posting gains of 0.52% in the June 2 week and 0.96% in the May 26 week.

However, before that show of strength, automotive services had been among the Bottom Five worst-performing major sectors for four straight weeks, including the week ended May 19, when it was the single worst performer of all, losing 0.72%.

Other sizable sectors showing strength last week included coal mining (up 0.62%), depository financial institutions (up 0.40%), primary metals processing (up 0.37%) and telecommunications (up 0.34%)

Grocers groan on Amazon’s Whole Foods buy

On the downside, food stores had the single-worst showing of any sizable sector, plunging by 1.53%, largely in response to the news that retailing giant Aamazon.com plans to buy supermarket chain operator Whole Foods – raising the specter of a greatly enhanced competitor for such high-yield grocery names as Fresh Market, Albertsons and SuperValu, all of whose bonds retreated after that announcement.

While the auto services grouping was going from worst to first last week, the food stores were following an opposite trajectory, going from first to worst; the grocers had lad the previous week’s Top Five list with a 0.70% gain in the June 9 week.

Meanwhile, other sectors posting sizable losses last week included a slew of energy-related sectors, reflecting continued volatility in world crude oil prices, which fell sharply during the week on oversupply concerns – oil and gas extraction (down 0.97%), energy exploration and production (down 0.89%), oilfield services (down 0.75%) and petroleum refining (down 0.25%).

It was the third straight week that oilfield services had been among the big losers, having also been there the week before with a 0.89% loss.

And it was the fourth straight week among the underachievers for oil and gas extraction and energy E&P; both had been among the Bottom Five in the June 9 week with losses of 1.41% and 1.12%, respectively.

Health care best on year

On a year-to-date basis, health care had the strongest return (up 8.92%), occupying the top spot for a third straight week after three straight weeks before that in the runner-up position.

Lodging – the previous leader – was thus only second-best also for a third week in a row with a 7.52% cumulative gain.

They were followed by third-best amusement and recreation services (up 6.45%), in the Number-Three slot for a second straight week; fourth-best depository financial services (up 6.42%) and fifth-best chemical manufacturing (up 6.39%).

Oil & gas extraction weakest on year

Among the worst year-to-date performers, oil and natural gas extraction – one of the week’s bigger losers, as noted – fell to the bottom of the pile last week, with a meager 0.09% gain for the year, after having been only third-worst the week before. It displaced automotive services, which had been the single worst YTD finisher for four straight weeks before that.

Miscellaneous retailing (up 0.19%) was the runner-up as second-worst on the year for a fifth consecutive week.

It was followed by automotive services – the week’s best performer, as noted – which parlayed that into a two-notch move up to just third-worst on the year so far with a 0.32% cumulative gain.

Energy E&P (up 0.34%) was fourth-worst on the year for a second week in a row after having been third-worst for two weeks before that.

And the food stores, hurt by their status as the week’s biggest loser, fell to fifth-worst on the year, up 1.86%.

© 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.