Advantage Data: Junk sectors continue lower for second straight week, led by energy groupings

By Paul Deckelman

New York, Jan. 19 – The junk bond market remained in negative territory for the new year so far, posting its second straight week on the downside last week, after having ended 2015 by breaking out of a three-week slump, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

That marked the fifth losing week in the last six weeks.

On a slightly longer-term basis, it was the eighth week in the last 10, dating back to the week ended Nov. 13, in which more sectors posted losses than had shown gains, against two weeks of having shown more gaining sectors than losers. The two positive weeks during that long stretch have been the week ended Dec. 31 and before that, the week ended Dec. 4.

Junkbondland, generally speaking, has been choppy ever since the end of a long upward surge in early May; after that, the market mostly experienced periods of several weeks of gains alternating with a couple of weeks of losses.

A subset of the 33 most significantly sized sectors (out of the total of 60 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 clean sweep, with all 33 of those sectors finishing in the red this week and none in the black.

That represented a deterioration from the week ended Jan. 8, when 23 of those sectors had posted losses and just 10 showed gains – which, in turn had been a sharp reversal from the Dec. 31 week, when 26 of those larger sectors had ended in positive territory, against seven that had losses.

Among the specific large-sized sectors this past week, coal mining had the biggest loss for the week of any of those sectors, while miscellaneous retailing had the smallest loss.

On a year-to-date basis, with two weeks in the books for the year so far, energy exploration and production had the worst showing, while depository financial institutions had the smallest cumulative loss.

Coal in a hole

Among specific large-sized sectors, coal mining (down 14.54% on the week) was the week’s single biggest loser for the second time in the last three weeks; it had also been the cellar-dweller during the Dec. 31 week, when it had lost 2.64% on the week.

Last week was coal’s 13th week out of the last 14 as part of the Bottom Five worst-performing large-sized sectors; it had also been there during the week ended Jan. 8, when it had lost 2.19%.

Also posting big losses during the latest week were energy exploration and production (down 14.35%), oil and natural gas extraction (down 12.67%), metals mining (down 8.58%) and oilfield services (down 5.23%).

It was the second straight week among the Bottom Five for energy E&P, oil and gas extraction and metals mining. The latter sector had actually been the previous week’s worst performer, with a 2.46% loss, and has now been in the Bottom five in eight weeks out of the last nine.

Oil and gas extraction and energy E&P had also been there during the Jan. 8 week with losses of 1.47% and 0.96%, respectively; both have now been among the biggest losers in nine weeks out of the last 10, with only the Dec. 31 week as the exception during that time.

Retailing has smallest loss

With all 33 of the significantly sized sectors finishing in the red last week, as noted, there was no upside as such. The Top Five list of the best performing sectors consisted of those having the smallest losses on the week, led by miscellaneous retailing (down 0.06%).

Other sectors having relatively minor losses on the week were paper manufacturing (down 0.08%), real estate (down 0.31%), food manufacturing (down 0.40%) and depository financial institutions (down 0.49%).

The retailing, papermaking and depository financials have now been in the Top Five for two straight weeks, having posted gains during the Jan. 8 week of 0.41%, 0.26% and 0.20%, respectively.

Energy E&P worst on year

After two full trading weeks so far in 2016 energy exploration and production – one of the week’s worst finishers – was also the absolute worst in terms of its cumulative loss, having racked up a 14.51% deficit so far. It had only been the fifth-worst the week before.

Oil and gas extraction (down 13.66%) fell to second-worst on the year, after having only been third-worst for the previous 14 straight weeks.

It traded places with coal mining (down 11.11%), the week’s worst finisher, as noted. Coal had been second-worst during the Jan. 8 week, improving, relatively speaking, to just third-worst last week.

Coal had ended 2015 as the absolute worst for the year, with a 35.31% loss, having been down at the bottom of the mineshaft for 51 straight weeks last year. Coal had also been the single-worst large-sized performer in 2012, 2013 and 2014 as well.

Metals mining (down 7.82%) moved up by three notches to just fourth-worst on the year, after having been the worst of any of the big sectors on a cumulative basis the week before.

Oilfield services (down 6.15%) was fifth-worst among the big sectors on the year so far, after not having been among the worst losers the previous week.

Besides energy E&P and coal mining, as noted, oil and gas extraction, metals mining and oilfield services were all among the week’s worst finishers as well.

Depository financials best

As with the Top Five list of the week’s stronger finishers – relatively speaking – none of the large-sized sectors are in the black so far this year.

Those showing the smallest cumulative losses were depository financial institutions (down 0.02%), paper manufacturing (down 0.15%), lodging (down 0.39%), real estate (down 0.42%) and food manufacturing (down 0.46%).

The depository financials moved up to the top spot after having been only fifth-best during the Jan. 8 week.

Paper manufacturing gained two notches in the standings, advancing to the runner-up spot year to date after having only been fourth-best the week before.

Lodging was in its second straight week in the number-three position; in 2015, it had been the single-best finisher on the year, gaining 18.92%, on the strength of having held that exalted position over the last three weeks of the year and before that, in 43 out of the last 44 weeks of 2015.

Neither number-four real estate nor number-five food manufacturing had been among the previous week’s year-to-date leaders.

All but lodging were also among the sectors posting the smallest losses for the week, as noted.

© 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.