Advantage Data: Junk sectors show third straight weekly loss; energy groupings main culprit

By Paul Deckelman

New York, Jan. 25 – The junk bond market remained in negative territory for a third straight week in the new year so far 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 Monday by Advantage Data Inc.

That also marked the sectors’ sixth losing week in the last seven.

On a slightly longer-term basis, it was the eighth week in the last 10, dating back to the week ended Nov. 20, in which more sectors posted losses than had shown gains, versus two weeks of having shown more gaining sectors than losers. The two positive weeks during that long stretch were 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, although the market has turned decidedly more negative in recent weeks, as indicated.

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 27 of those sectors having ended in the red during the week ended Friday, with just six having finished in the black.

However, as weak a showing as that was, it still indicated an improvement from the week before, ended Jan. 15, when all 33 of those larger sectors had ended with losses and none had shown any gains.

The market’s most recent positive week, as indicated, was the Dec. 31 week, when 26 of those larger sectors had ended in positive territory, against seven ending on the negative side of the fence.

Among the specific large-sized sectors, for a second straight week, coal mining had the biggest loss of any of those sectors on the week. Chemical manufacturing did the best.

On a year-to-date basis, with three weeks in the books for the year so far, energy exploration and production had the worst showing for a second week in a row, while miscellaneous retailing had the biggest cumulative gain.

Coal stays in a hole

Among specific large-sized sectors, coal mining (down 9.61%) was the week’s single biggest loser for a second straight week and for the third time in the last four weeks; its 14.54% loss had been the worst in the Jan. 15 week, and 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 14th week out of the last 15 as part of the Bottom Five worst-performing large-sized sectors.

Also posting big losses during the latest week were oil and natural gas extraction (down 3.30), food stores (down 2.75%), energy exploration and production (down 2.53%) and oilfield services (down 2.44%).

It was the second straight week among the Bottom Five for oilfield services, which had lost 5.23% in the Jan. 15 week, and the third successive week there for both oil and gas extraction and energy E&P, which posted previous-week losses of 12.67% and 14.35%, respectively.

Oil and gas extraction and energy E&P have also now been the biggest losers in 10 weeks out of the last 11, with only the Dec. 31 week as the exception during that time.

Chemical makers climb on week

On the upside, chemical manufacturing was up by 1.16% last week, the best showing of any of the large-sized sectors.

Health care (up 0.98%), primary metals processing (up 0.21%), food manufacturing (up 0.12%) and miscellaneous retailing (up 0.09%) rounded out the Top Five list of the best-performing large-sized sectors for the latest week.

It was the second straight week there for food manufacturing, which had also been in that select circle during the Jan. 15 week – when none of the major sectors had shown any gains – with a 0.40% loss, considered relatively moderate for that decidedly negative week.

And it was the third time there for the retailers, whose 0.06% loss the previous week was actually the smallest of any of the big sectors; in the week ended Jan. 8, it had gained 0.41%.

Energy E&P worst on the year

After three trading weeks so far in 2016, energy exploration and production was the absolute worst in terms of its cumulative loss, having racked up a 15.95% deficit so far.

It had also been the worst cumulative performer the week before.

Oil and gas extraction (down 15.70%) was second-worst on the year for a second consecutive week; before it fell one notch in the rankings during the Jan. 15 week, it had been third-worst for the previous 14 straight weeks.

Oilfield services (down 9.03%) dropped by two slots to third-worst on the year so far from just fifth-worst the previous week.

Metals mining (down 8.01%) was fourth-worst on the year for a second successive week.

Coal mining (down 7.45%) improved up by two positions, relatively speaking, to just fifth-worst year to date from third-worst the week before and from second-worst during the first week of the new year.

Before that, though, 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.

All of the above sectors but for metals mining were also among the week’s worst finishers, as noted.

Miscellaneous retailers tops

Miscellaneous retailing (up 0.76%) was the only significantly sized sector in the black on a year-to-date basis last week; all of the other leading sectors only had smaller cumulative losses for 2016 so far.

The retailers moved to the top of the ladder despite not having been among the leaders the week before.

Depository financial institutions (down 0.43%) had the smallest loss and was thus the second-best on the year so far, although it had been the best finisher – again with the smallest loss for the year – the week before.

Lodging (down 0.48%) was in its third 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.

Food manufacturing (down 0.55%), improved, relatively speaking, to fourth-best on the year from just fifth-best the week before.

Real estate (down 0.84%) slipped by one position in the rankings to fifth place on the year so far from fourth-best the week before.

Retailing and food manufacturing were also among the sectors posting the best gains on the week, as noted.

© 2015 Prospect News.
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