Advantage Data: Junk sectors rebound after first fall in seven weeks

By Paul Deckelman

New York, March 20 – The junk bond market was on the rebound last week, ended March 17, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News by Advantage Data Inc. The week before that, ended March 10, it had moved sharply lower as it suffered its first fall after six straight weeks of upside movement.

That six-week winning streak, which had started during the week ended Jan. 27 and which then ran through the week ended March 3, 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.

Last week marked the ninth weekly gain so far this year, versus just two weekly losses since the start of 2017.

In the last 10 weeks, dating back to Jan. 13, the sectors have posted eight weeks of mostly gains, versus two weeks of mostly losses.

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 all 29 of those bigger sectors finishing in the black last week, with four ending in the red.

That represented a decisive comeback from the negative clean sweep seen during the March 10 week, when all 33 of those larger sectors had shown losses and none had posted any gains.

The week before that, ended March 3, the final week of the six-week winning streak, as noted, 27 of those major sectors had ended in positive territory and the other six sectors had ended in negative territory.

Among specific large-sized sectors during the March 17 week, automotive services turned in the best showing for the second time in the past three weeks, doing so by coming back from being tied for the worst performance during the March 10 week.

Chemical manufacturing had the worst loss in the latest week.

With 11 weeks now in the books for 2017, healthcare services took over as the best-performing large-sized sector on a year-to-date basis, dethroning oilfield services, the champion performer for the previous six weeks in a row.

Energy exploration and production meantime fell to the bottom as the worst cumulative performer so far.

Auto services jump to first

Automotive services, consisting largely of vehicle-rental companies, turned in the best performance of any large-sized sector last week, as noted, returning 0.85% on the week.

It thus had the notable distinction of going from worst to first; during the March 10 week, auto services had been tied with energy E&P for the worst weekly performance of any large-sized sector, both plunging by 1.94%.

That was a rare show of weakness for the recently strong auto services grouping, which had also been the best single performer the week before that, ended March 3, when it shot up by 1.99%.

It has now been the leading performer in two weeks out of the last three.

Other sectors showing strength this past week included metals mining (up 0.65%), telecommunications (up 0.41%), amusement and recreational services (up 0.40%) and transportation equipment manufacturing (up 0.39%).

Last week was the latter sector’s second Top Five finish in the last three weeks, having also been there during the March 3 week with a gain of 0.50%.

Chemical makers clobbered

On the downside, chemical manufacturing, which includes pharmaceutical companies, turned in the worst showing of any large-sized sector, plunging by 1.61% on the week.

The Bottom Five list of the week’s worst-performing large-sized sectors also included non-computer electronics and electrical manufacturing (down 0.15%), primary metals processing (down 0.14%) and machinery and computer manufacturing (down 0.12%).

Miscellaneous retailing rounded out the Bottom Five with a puny 0.01% gain on the week.

Healthcare best on year

On a year-to-date basis, healthcare services took over the top spot last week with a 4.62% cumulative return.

That dropped oilfield services (up 4.07%) into third-place, after six straight week before that in the top position. The sector trailed runner up durable goods distributors (up 4.17%), which moved up from third place.

Those three were followed by fourth-best lodging (up 3.80%) and fifth-best coal mining (up 3.11%).

On the downside, energy E&P, as noted, was the worst cumulative performer, down an even 1.00%.

Other year-to-date losers included second-worst miscellaneous retailing (down 0.83%), third-worst precision instrument manufacturing (down 0.69%), fourth-worst oil and natural gas extraction (down 0.24%) and fifth-worst food stores (down 0.16%).

© 2015 Prospect News.
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