Advantage Data: Junk sectors plunge across the board in latest week, fifth loss in last six weeks

By Paul Deckelman

New York, Dec. 14 – The junk bond market reverted to its recently negative pattern last week, after having been better the week before, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It was the sectors’ fifth week on the downside out of the past six weeks; during the week ended Dec. 4, they had snapped a four-week losing streak that dated back to the week ended Nov. 6.

Those losses, in turn, had followed a four-week string of gains dating back to the week ended Oct. 9.

Junkbondland, generally speaking, has been choppy and sloppy ever since the end of a long upward surge in early May, with the market after that having experienced periods of several weeks of gains alternating with a couple of weeks of losses and, during the week ended Sept. 18, one week which saw the sectors evenly split, with neither gains nor losses having the edge.

With 49 weeks now in the books so far this year, 28 weekly advances have been recorded during that time, versus 20 weeks on the downside and the aforementioned one evenly split week.

A subset of the 33 most significantly sized 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 a virtual clean sweep in negative territory, with 32 of those sectors finishing the week in the red, no sectors ending in the black and one sector unchanged on the week, showing neither a gain nor a loss.

That stood in sharp contrast to the previous week, ended Dec. 4, when 20 of those more sizable sectors showed gains on the week, with the other 13 sectors showing losses.

Among the specific large-sized sectors, coal mining was back in its usual spot, showing the biggest loss of any of those sectors.

Paper manufacturing was the best of the lot, relatively speaking, ending unchanged on the week.

Coal mining remained by far the worst-performing big sector on a year-to-date basis, where it has been for the last 48 consecutive weeks.

However, the food stores sector narrowly edged out lodging to claim the top spot for the year to date; the innkeepers had been the cumulative leader for the previous 40 weeks.

Coal back on the bottom

Advantage Data showed the coal mining sector as the worst-performing large-sized sector last week, as it plummeted by 14.96%. It was coal’s fifth consecutive week among the Bottom Five worst-performing large-size sectors – it was there the week before with a 2.77% loss – and its third week out of those five in which coal was the absolute worst finisher.

Coal has now been among the Bottom Five in eight weeks out of the last nine, a stretch only broken by a rare visit to the list of the Top Five best performers during the week ended Nov. 6.

Two other energy-related sectors – exploration and production (down 10.05%) and oil and natural gas extraction (down 8.44%) have followed a similar trajectory to coal’s – among the Bottom Five for five straight weeks and in eight weeks out of the last nine, except for the Nov. 6 week. The E&P sector was also among the biggest losers in the Dec. 4 week, when it lost 2.98%, while oil and gas extraction lost 2.03% that week.

Metals mining (down 5.49%) finished among the Bottom Five for a fourth straight week; it had actually been the single worst-performing large sector in the Dec. 4 week (down 3.42%) and in the week ended Nov. 27 (down 1.89%).

Rounding out the Bottom Five, midstream energy services lost 3.50% last week.

Papermakers unchanged

There wasn’t much of an upside last week, with only one sector – paper manufacturing – managing to stay out of the red, as noted. The paper makers ended unchanged, showing neither a gain nor a loss.

With all of the other key sectors posting losses last week, the Top Five was filled out by those sectors with smaller losses than the others – insurance carriers (down 0.35%), food stores (down 0.44%), real estate (down 0.53%) and precision instrument manufacturing (down 0.61%).

Real estate has now been among the Top Five in two weeks out of the last three and in four weeks out of the last five.

YTD: Food stores take lead

On a year-to-date basis, the food stores sector (up 6.95%) jumped by four places in the rankings, grabbing the top spot after having been just fifth-best the previous week.

In so doing, it ended the long reign at the top by the lodging sector (up 6.94%), which had been booked into the penthouse suite as the best cumulative performer among the major sectors for the previous 40 straight weeks, a winning streak dating back to the week ended March 6.

Lodging’s fall into the runner-up spot pushed the previous week’s Number-Two sector, depository financial institutions, into third place with a 6.59% cumulative return. The depositories have now been in third place in six weeks out of the last seven and in nine weeks out of the last 12.

Automotive services (up 5.33%) also moved down a notch, to fourth-best from third place the week before.

Securities and commodities brokers, dealers and exchanges (up 4.86%) improved to fifth place on the year, despite having not been among the leaders the previous week. However, it has been fifth best now in four weeks out of the last six.

Only the food stores sector was also among the week’s leading performers.

YTD: Coal still buried

On the downside, all of the worst sectors were unchanged last week, relative to one another, from the positions they had held during the previous three weeks, dating back to Nov. 20.

Coal mining continued to wallow at the bottom of the pile as the worst year-to-date performer, in that position for a 48th straight week with a 37.39% year-to-date loss.

The energy E&P sector was down 25.55% year to date, leaving it second-worst on the year for a 10th straight week.

Oil and gas extraction (down 21.57%) was third-worst on the year, also for a 10th straight week.

Metals mining (down 12.33%) was fourth-worst on the year for a fourth straight week and for a seventh week out of the last eight.

That was also the case with primary metals processing (down 11.69%), which was fifth-worst on the year for a fourth consecutive week and for a seventh week in the last eight.

All of those worst-lagging year-to-date sectors but primary metals were also among the week’s worst finishers, as noted.

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