Advantage Data: Junk sectors fall for third straight week after snapping five-week upside run

By Paul Deckelman

New York, Nov. 14 – The junk bond market remained mired on the downside for a third consecutive week last week (ended Nov. 11), according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

Those three weeks of losses follow five straight weeks of gains, which lasted through the week ended Oct. 21.

Gains have now been seen in six weeks out of the last 10, dating back to the week ended Sept. 9.

On a somewhat longer-term basis, in the 45 weeks since the start of the year, gainers have dominated in 33 of those weeks, versus 12 weeks in which more negatives were seen.

Eleven of those better weeks came during a long winning streak which began during the week ended Feb. 19 and which then had extended through the week ended April 29.

Besides that 11-week winning streak and subsequent more recent improvements, the sectors had also done better during the week ended Jan. 29 – after having started 2016 with three straight weeks on the downside and then ultimately racking up losses in five out of the first six weeks of the new year.

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 20 of those bigger sectors finishing in the red last week, versus 12 sectors that ended in the black, with one sector – securities and commodities brokers, dealers and exchanges – unchanged on the week, showing neither a gain nor a loss.

That represented something of an improvement from the week ended Nov. 4, which was a complete shutout to the downside, with all 33 sectors showing losses and none posting gains.

Among specific large-sized sectors last week, coal mining posted the biggest gain, while health care services was the biggest weekly loser.

Coal mining was also on top on a year-to-date basis, for a third straight week and for five weeks out of the last six, while health care’s poor showing on the week also made it the worst year-to-date performer so far.

Health care is hurting

On the downside, health care (down 3.02%) had the worst showing of any significantly sized industry grouping last week and has now been among the Bottom Five worst-performing large sectors for a second week out of the last three.

The sector’s slide coincided with a sharp drop in the bonds of such hospital operators as Community Health Services, Inc., Tenet Healthcare Corp, and HCA Inc. following the surprise victory of Donald Trump in last Tuesday’s U.S. presidential election; Trump has made the repeal of president Obama’s signature health care law a key part of his election platform.

Several other health care oriented sectors whose revenues and bottom lines could suffer should Trump succeed in gutting the Obamacare law were also in last week’s Bottom Five, including chemical manufacturing (down 2.24%) – which includes pharmaceutical companies – and precision instrument manufacturing (down 0.99%), which includes medical device producers.

Rounding out the week’s Bottom Five list were automotive services (down 1.75%), and food stores (down 0.92%). The grocers had spent the previous two weeks, and three weeks out of the prior four, among the Top Five best-performing large sectors.

Coal back on top

On the upside, coal mining (up 2.26%) had the best showing of any large-sized sector; it was coal’s second week out of the last three in that position, and its fifth week out of the last seven, and it was coal’s seventh week out of the last eight among the Top Five best-performing large-sized sectors.

Also showing strength last week were metals mining (up 1.06%), primary metals processing (up 0.93%), holding companies and other investment offices (up 0.48%) and oilfield services (up 0.47%).

Metals mining bounced back last week after having spent the previous week, ended Nov. 4, as the worst-performing large-sized sector, with a 2.17% loss that week, but has now been among the Top Five in two weeks out of the last three and in seven weeks out of the last 10.

Oilfield services had been among the worst finishers the previous two weeks, including the Nov. 4 week, when it lost 1.63%.

The holding companies sector has now been among the big winners in two weeks out of the last three.

© 2015 Prospect News.
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