Advantage Data: Junk sectors see first loss after five straight gains

By Paul Deckelman

New York, June 26 – The junk bond market stumbled last week, ended June 23, enduring its first loss after five consecutive weekly gains, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

Last week still only marked the sectors’ second negative week out of the last 10 weeks, dating back to the week ended April 21.

It was the first setback seen since the week ended May 12, which in turn had been the sectors’ first loss after six consecutive weeks before that on the upside, dating back to the week ended March 31.

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 most of June.

For the year to date, a majority of the sectors have finished on the plus side in 20 weeks so far, while negative results have dominated in five weeks to date.

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 23 of those sectors ending in the red last week, with 10 sectors finishing in the black.

That stood in sharp contrast to the results the week before, ended June 16, when 26 of those sectors had posted gains and seven had notched losses.

During the most recent previous 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 23 week, chemical manufacturing was the top performer, while oil and natural gas extraction had the biggest loss.

On a year-to-date basis, with 25 weeks of 2017 now in the books, lodging took over as the best cumulative performer, dethroning healthcare, which had held the top spot over the previous three weeks, while oil and natural gas extraction did the worst for the year to date for a second straight week, after four straight weeks before that of automotive services having had that unwanted honor.

Chemicals bubble up to top

Among the specific large-sized sectors, chemical manufacturing, as noted, was the top finisher among the sectors last week, gaining 0.66%.

Other sizable sectors showing relative strength in a largely negative week last week included depository financial institutions and non-depository credit institutions, each of which rose by 0.16% on the week, plus telecommunications (up 0.13%) and real estate (up 0.05%).

It was the second straight week among the Top Five best-performing large-sized sectors for both the depository financials and for telecom, each of which had also made it during the June 16 week with gains of 0.40% and 0.34%, respectively.

Energy names dominate negatives

On the downside, energy names dominated the latest Bottom Five list of the worst-performing large-sized sectors, with oil and natural gas extraction, as noted, turning in the worst performance, nosediving by 2.66% on the week.

It was the sector’s fifth consecutive week among the underperformers, having also been there in the June 16 week with a 0.97% loss.

Other big losers on the week included energy exploration and production (down 2.50%), food stores – the only non-energy grouping among the worst finishers – which lost 2.13%, oilfield services (down 1.48%) and coal mining (down 1.08%).

As with oil and gas extraction, energy E&P was among the Bottom Five for a fifth straight week, having also been there the week before with an 0.89% loss.

Food stores were among the big losers for a second straight week, having also been there the week before, when, in fact, the grocers 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.

In plunging to the bottom of the pile during the June 16 week, food stores had accomplished the unusual, and unwelcome feat of going from first to worst; the sector had led the previous week’s Top Five list with a 0.70% gain in the June 9 week.

Oilfield services was among the worst laggards for a fourth straight week, having also been among the losers in the June 16 week with a 0.75% deficit.

Lodging regains top spot

On a year-to-date basis, the lodging sector (up 9.96%) regained the leadership role it had held earlier in the spring, switching places with healthcare (up 8.24%), which had held the top spot for the three previous weeks, with lodging relegated to the runner-up role during that time. Before that, lodging had been the cumulative leader and healthcare just Number Two over three successive weeks.

Those top two finishers were followed by third best chemical manufacturing (up 8.00%), fourth-best amusement and recreation services (up 6.70%) and fifth best depository financial institutions (up 6.55%).

Oil & gas extraction weakest on year

Among the worst year-to-date performers, oil and natural gas extraction – the week’s biggest loser, as noted – was at the bottom of the pile for a second consecutive week last week, with 2.41% loss.

It was followed by energy exploration and production, which fell two notches to second-worst on the year from just fourth-worst previously with a 2.18% loss.

That displaced miscellaneous retailing (down 0.03%), which had been second worst for five straight weeks before that, moving up to just third worst last week.

Those sectors were followed by fourth worst automotive services, which posted a meager 0.08% gain for the year so far, and food stores, up just a modest 0.47% on a year-to-date basis.

© 2015 Prospect News.
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