Advantage Data: Junk sectors rebound, break four-week losing streak

By Paul Deckelman

New York, Nov. 28 – The junk bond market decisively broke out of its recent rut last week (ended Nov. 25), posting its first upturn after four straight weeks before that on the slide, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

Those four weeks of losses followed five straight weeks of gains before that, lasting through the week ended Oct. 21.

In the latest 10 weeks, dating back to the week ended Sept. 23, there have been six weeks of gains, balanced against four weeks of losses.

On a somewhat longer-term basis, in the 47 weeks since the start of the year, gainers have dominated in 34 of those weeks, versus 13 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 30 of those bigger sectors finishing in the black last week, versus just three sectors that ended in the red.

That represented virtually a complete reversal from the week ended Nov. 18, which saw 29 of the sectors posting losses versus only three sectors showing gains, plus one unchanged sector showing neither a gain nor a loss on the week.

Among specific large-sized sectors last week, oil and natural gas extraction posted the biggest gain, while coal mining was the biggest weekly loser.

However, coal still managed to regain its lead on a year-to-date basis, which it has now held in four weeks out of the last five and six weeks out of the last eight.

Health care services fell to the bottom of the pile as the worst year-to-date performer so far for the second time in the last three weeks.

Oil & gas extraction excels

Oil and gas extraction, as noted, turned in the strongest performance last week of any large-sized sector, rising 1.03% on the week.

It was the sector’s second straight week among the Top Five best large-sized sectors, having also been there during the Nov. 18 week – which saw most sectors on the downside – with a 0.04% gain.

Also showing strength during the latest week were energy exploration and production (up 0.69%), metals mining (up 0.61%), securities and commodities brokers, dealers and exchanges (up 0.58%) and holding companies and other investment offices (up 0.51%).

It was the second straight week among the Top Five for energy E&P, which had been there the week before with a 0.13% loss – a far smaller deficit than most other sizable sectors that week.

Metals mining actually spent that previous week among the Bottom Five worst-performing major sectors, with a 1.21% loss that week but has now been among the Top Five finishers in two weeks out of the last three and on a longer-term basis, in eight weeks out of the last 12.

The holding companies sector has also been among the Top Five in two weeks out of the last three, and in three weeks out of the last five.

Coal turns cold

Among the downsiders, coal mining suffered the biggest loss of any large-sized sector last week, falling by 0.77% on the week.

Food stores (down 0.50%) and miscellaneous retailers (down 0.01%) also showed losses for the week.

With just three actual losing major sectors, as noted, last week’s Bottom Five was rounded out by sectors showing much smaller-than-average gains – paper manufacturing (up 0.05%) and the insurance carriers and transportation equipment manufacturing sectors (both up 0.06%).

The food stores grouping has now been among the Bottom Five in two weeks out of the last three.

Coal still best on year

Despite its weekly loss, the Advantage Data calculations still showed coal mining as the best year-to-date performer among those large-sized sectors with a 93.74% cumulative return.

Coal thus overtook the YTD leader during the Nov. 18 week, metals mining, and has now been the top performer for the year so far in four weeks out of the last five and in six weeks out of the last eight.

Metals mining (up 68.83%) fell back to its familiar runner-up spot, where it has been now also in four weeks out of the last five and six weeks out of the last eight.

Those sectors were followed by third-best energy E&P (up 37.20%), weekly leader oil and gas extraction at fourth-best (up 35.52%) and Number-Five primary metals processing (up 29.94% on the year so far).

Health care suffers a relapse

On the downside, health care services fell four notches in the year-to-date rankings last week, to the absolute worst cumulative performer (up an anemic 4.47%) after having been only fifth-worst in the Nov. 18 week. But it has now been down at the bottom in two weeks out of the last three.

Automotive services (up 5.37%) was second-worst on the year for a third straight week.

It was followed by third-worst chemical manufacturing (up 6.45%), fourth-worst precision instrument manufacturing (up 6.86%) and fifth-worst depository financial institutions (up 7.03% on the year).

© 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.