Advantage Data: Junk sectors plunge across the board, snapping six-week winning streak

By Paul Deckelman

New York, Sept. 19 – The junk bond market turned sharply negative last week – its first downturn after six consecutive weeks before that of continual improvement, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It was the junk sectors’ first loss since back in the week ended July 29, which in turn had been the junk market’s first setback after five consecutive weeks of gains stretching back to mid-June.

Gains have thus now been seen in eight weeks out of the last 10.

On a somewhat longer-term basis, in the 37 weeks since the start of the year, gainers have dominated in 28 of those weeks, versus nine weeks in which more negatives were seen.

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 fully 32 of those bigger sectors finishing in the red last week, with only one sector closing in the black.

That was a more than complete reversal of the pattern seen the week before, ended Sept. 9, when 22 of those more sizable sectors had posted gains, while nine sectors were showing losses and two sectors were unchanged on the week, showing neither a gain nor a loss.

Among specific large-sized sectors last week, holding companies and other investment offices was the only sector actually showing a gain for the week, while chemical manufacturing had the biggest loss of any major sector.

Metals mining regained its familiar top spot on a year-to-date basis after two weeks in second-place exile behind coal mining, and has now reigned supreme in 27 weeks out of the last 29.

Food stores were at the bottom of the year-to-date rankings for a second week in a row.

Holding companies sole gainer

Among specific large-sized sectors, the holding companies and other investment offices sector edged upward by 0.06% last week – the only large-sized sector actually finishing in the black, as noted.

The sector has now been among the Top Five best-performing large-sized sectors in two weeks out of the last three, having also been there during the week ended Sept. 2 with a 0.43% gain that week.

With the holding companies as the only positive finisher, last week’s Top Five list was filled out by sectors showing only relatively small losses versus their much more negative peers.

These included midstream energy services (down 0.17%), metals mining and precision instrument manufacturing (both down 0.19%) and the printing and publishing and real estate sectors (both down 0.23% on the week).

It was the second straight week among the Top Five for both metals mining and for precision instrument manufacturing, which had both been there during the Sept. 9 week with respective gains of 0.51% and 0.45%.

None of the other sectors have recently been among the better performers.

Chemical makers clobbered

On the downside, the chemical manufacturing sector (down 1.19%) had the worst showing of any large-sized sector last week.

It was chemicals’ second week in the last three among the Bottom Five worst-performing large-sized sectors, having also been there during the Sept. 2 week with a 0.18% loss.

Also showing weakness during the latest period were primary metals processing (down 1.14%), transportation equipment manufacturing (down 1.01%), coal mining (down 0.96%) and oil and natural gas extraction (down 0.95%)

It was a comedown for oil and gas extraction, which had actually been among the Top Five during the Sept. 9 week with a 0.56% rise, and for coal mining, which had been among the Top Five during each of the previous two weeks; It was the best-performing large-sized sector in the Sept. 9 week, with a 1.29% return, on top of a 0.50% gain in the Sept. 2 week.

None of last week’s other underachievers had been in that position recently.

Metals miners back on top

On a year-to-date basis, the metals mining sector (up 55.22%) regained the top spot that it had held for 26 consecutive weeks, dating back to the beginning of March, before being temporarily overthrown by coal mining and relegated to second place during the Sept. 2 week and staying there the following week as well.

Coal (up 47.80%), after enjoying two weeks at the top, meanwhile reverted back to its familiar runner-up position, where it has now been in three weeks out of the last five and in five weeks out of the last eight.

It was followed by third-best energy E&P (up 33.34%), fourth-best oil and gas extraction (up 30.51%) and fifth-best primary metals processing (up 25.57%).

Food stores worst on year

On the downside, food stores remained the absolute worst large sector on a cumulative basis last week with a paltry 5.44% gain, the sectors’ second straight week there. The grocers have now been the worst cumulative performer in eight weeks out of the last 10.

Automotive services (up 6.43%) were second-worst on the year last week, falling one notch in the ranking after having only been third-worst the week before. They have now been second-worst for the year in four weeks out of the last six and seven out of the last 10.

Autos were followed by third-worst depository financial institutions (up 6.84%), fourth-worst securities and commodities brokers, dealers and exchanges (up 7.16%) and fifth-worst non-depository credit institutions (up 7.44%).

© 2015 Prospect News.
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