Advantage Data: Junk sectors post fifth gain after four losses

By Paul Deckelman

New York, Dec. 28 – The junk bond market made it five straight weeks on the upside during the most recent reporting week (ended Dec. 23) after having decisively broken out of its recent rut in late November by snapping a four-week-long losing streak, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News by Advantage Data Inc.

Those four weeks of losses, running through the week ended Nov. 18, had in turn followed five straight weeks of gains before that, lasting through the week ended Oct. 21.

In the latest 10 weeks, dating back to that Oct. 21 week, there have been six weeks of gains, balanced against the four weeks of losses.

On a somewhat longer-term basis, in the 51 weeks since the start of the year, gainers have dominated in 38 of those weeks, versus 13 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.

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 31 of those bigger sectors finishing in the black last week, versus only two ending in the red.

That represented a solid improvement from the mediocre pattern seen the week before, ended Dec. 16, when 18 of those key sectors had shown gains, with 15 showing losses.

The most recent five weeks represent virtually a complete reversal from the week ended Nov. 18 – the most recent negative week – when 29 of the sectors had ended in negative territory, versus only three sectors ending on the plus side, as well as one unchanged sector.

Among specific large-sized sectors during the Dec. 23 week, precision instrument manufacturing posted the biggest gain, while automotive services had the worst loss.

Coal mining was the best year-to-date performer for a fifth straight week and on a longer-term basis for a 10th week out of the last 12.

Healthcare services was the worst year-to-date performer for a third week in a row.

Precision instruments move up

Precision instrument manufacturers – a sector which includes many medical device makers – turned in the strongest performance during the week of any large-sized sector, as noted, rising 0.71% on the week.

Also showing strength during the latest week were coal mining (up 0.49%), telecommunications (up 0.47%) and the healthcare and transportation equipment manufacturing sectors, both of which gained 0.45% on the week.

After a one-week hiatus, it was the third week in the last four during which the coal sector was among the Top Five best-performing large-sized sectors. Coal had also recently been up by 1.77% during the week ended Dec. 9.

It was the second straight week among the big gainers for transportation equipment manufacturing, which had also been there during the Dec. 16 week with a 0.54% advance.

Telecom, on the other hand, had actually been among the Bottom Five worst-performing large-sized sectors during that same Dec. 16 week, with a 0.35% loss. But the sector has still now been among the Top Five in two weeks out of the last three, with a 1.41% gain in the Dec. 9 week.

Automotive services skid lower

Automotive services had the largest loss among the two sectors actually finishing in the red during the Dec. 23 week, retreating by 0.29%.

It was the sector’s second straight week among the losers, having also been there – and also with a 0.29% loss – during the week ended Dec. 16.

Metals mining was the other sector finishing on the downside, off by 0.09%.

With just two sectors showing losses, as noted, sectors showing only very small gains filled out the week’s Bottom Five list.

These included oil and natural gas extraction (up 0.08%), chemical manufacturing (up 0.10%) and oilfield services (up 0.11%).

The chemical makers, a category which includes pharmaceutical companies, were among the Bottom Five for a second consecutive week and for a third week in the last four; in fact, the sector was the single worst-performing large-sized industry grouping during the Dec. 16 week, when it lost 0.83%.

Oilfield services and oil and gas extraction, on the other hand, had recently been showing strength.

During the Dec. 16 week, oilfield services had been among the Top Five for a second time in three weeks and in fact was the best-performing large-sized sector that week with a 0.97% return.

Oil and gas extraction had spent the previous five straight weeks among the big winners, including the Dec. 16 week, when it gained 0.54%.

Coal still best on year

Coal mining remained clearly the best year-to-date performer among the large-sized sectors for a fifth straight week and a 10th week out of the last 12, with a 109.45% cumulative return.

It was followed by metals mining (up 70.39%), energy exploration and production (up 41.19%), oil and gas extraction (up 40.68%) and primary metals processing (up 31.01%) – the fourth consecutive week during which those sectors had finished in that exact same order.

Healthcare again worst on year

Healthcare remained at the bottom of the year-to-date rankings for a third consecutive week with just a 4.85% return on the year.

Other cumulative underperformers were chemical manufacturing (up 4.86%), automotive services (up 6.15%), precision instrument manufacturing (up 6.81%) and food stores (up 7.40%).

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