Advantage Data: Junk sectors post fifth straight gain, up in nine weeks out of last 10

By Paul Deckelman

New York, Feb. 27 – The junk bond market posted its fifth consecutive gain last week (ended Feb. 24), according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

Last week’s gain, and the advances the week before, ended Feb. 17, and in the three weeks before that, ended Feb. 10, Feb. 3 and Jan. 27, came as the market rebounded after having stumbled during the week ended Jan. 20, which had been its first loss after eight straight weekly gains. Before that loss, the sectors had been heading higher ever since decisively breaking out of a rut in late November, when they had snapped a four-week-long losing streak.

Last week marked the seventh weekly gain so far this year, versus one weekly loss.

In the latest 10 weeks, dating back to the week ended Dec. 23, there have been nine weeks of gains, versus just one week of losses during that stretch.

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 black last week, with only one sector ending in the red.

That was a definitive strengthening from the week before, ended Feb. 17, when 24 of those major sectors had posted gains, eight had shown losses and one sector was unchanged on the week, showing neither a gain nor a loss.

The past five weeks have represented a clear comeback from the decisively negative breakdown seen during the Jan. 20 week – the most recent losing week – when 22 of those key sectors had ended in the red, only eight finished in the black and three others had been unchanged on the week.

Among specific large-sized sectors during the Feb. 24 week, health care services posted the biggest gain, while coal mining – the previous week’s best large-sized performer – was the only sector finishing in the red.

With eight weeks now in the books for 2017, oilfield services was the best-performing large-sized sector on a year-to-date basis so far for a fourth week in a row, while the food stores grouping was the worst cumulative performer for a second straight week.

Health care outperforms

Health care services turned in the strongest performance of any large-sized sector last week, as noted, rising by 1.88% on the week.

Also showing strength during the latest week were chemical manufacturing (up 1.42%), precision instrument manufacturing (up 0.79%), telecommunications (up 0.76%) and automotive services (up 0.62%).

It was the fourth straight week that the chemical makers finished among the Top Five best-performing large-sized sectors; the grouping had also been there during the Feb. 17 week, the Feb. 10 week and the Feb. 3 week with returns of 0.76%, 0.59% and 0.74%, respectively.

After a week-long hiatus, automotive services was back among the Top Five for a second week in the last three; it had also been among the big winners during the Feb. 10 week, when its 0.66% gain was, in fact, the best showing of any large-sized sector.

Coal turns cold

On the downside, coal mining, as noted, turned in the worst performance of any of the key sectors, falling by 0.17% – the only sizable sector to finish in negative territory last week.

Coal thus had the dubious distinction of having gone from first to worst; during the Feb. 17 week, coal had led all of the large-sized sectors with a 1.19% gain. That had been coal’s third consecutive week among the Top Five, and its second week in the previous three at the very top of the pile, having also led all of the sectors in the Feb. 3 week with a 0.82% advance.

With no other sectors showing losses last week, the Bottom Five list of the worst-performing large-sized sectors was filled out by sectors which merely had considerably smaller gains than all of the others.

These included energy exploration and production (up 0.12%), oil and natural gas extraction (up 0.18%), primary metals processing (up 0.20%) and electric and natural gas utilities (up 0.23%).

It was the third straight week among the Bottom Five for energy E&P, which had also been there during the Feb. 17 and Feb. 10 weeks with losses of 0.33% and 0.06%, respectively.

It was the fourth successive week among the underachievers for oil and gas extraction, which had lost 0.20% during the Feb. 17 week; the sector had also been there during the Feb. 10 week with a 0.07% downturn and during the Feb. 3 week with a meager 0.01% return. That was a decided comedown from the week ended Jan. 27, when the sector had been the best large-sized performer of all with a gain of 0.72% on the week.

After a one-week pause, the utilities sector was back among the Bottom Five for a third week out of the last four, having also been there with a 0.22% loss during the Feb. 10 week – the worst of any of the major sectors that week – and a 0.03% downturn during the Feb. 3 week.

Oilfield services year’s best

On a year-to-date basis, oilfield services had the strongest cumulative showing so far, at 6.97%, the sector’s fourth straight week in the top slot.

That was followed by chemical manufacturing (up 5.80%), its fourth consecutive week in the runner-up position, and after that, by third-best health care services (up 4.89%), fourth-best durable goods distributors (up 4.57%) and fifth-best lodging (up 3.39%), which slipped by one position after having been fourth-best the week before.

Chemical manufacturing and health care, as noted, were also among the week’s strongest performers.

On the downside, food stores (down 0.62%) was on the bottom shelf on a year-to-date basis for a second straight week. It was the only key sector showing a year-to-date loss last week and was followed by sectors posting relatively smaller year-to-date gains than their peers.

Miscellaneous retailing (up 0.45%) was second-worst for a second week in a row, after having been the year-to-date rankings cellar dweller for two consecutive weeks before that.

That was followed by third-worst securities and commodities brokers, dealers and exchanges (up 1.25%), fourth-worst energy exploration and production (up 1.31%) and fifth-worst automotive services (up 1.50%), which had improved by one notch, relatively speaking, after having been fourth-worst the week before.

Energy E&P, as noted, was also among the week’s worst laggards.

© 2015 Prospect News.
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