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

By Paul Deckelman

New York, June 5 – The junk bond market continued to advance last week, ended June 2, posting its third consecutive weekly gain, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

The sectors were rebounding after having been mostly lower during the week ended May 12, which had been their first loss after six consecutive weeks before that on the upside, dating back to the week ended March 31.

Last week marked the sectors’ ninth positive week out of the last 10 weeks, dating back to that March 31 week.

While the sectors had seen smooth sailing throughout April, after a mostly choppy March of alternating up and down weeks, things turned more turbulent for most of May.

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 sectors ending in the black last week, with only three sectors in the red.

That was in line with the week before, ended May 26, when 31 of those sectors had posted gains and just two had notched losses.

The week before that, ended May 19, had seen a 30-to-3 positive breakdown like last week’s.

Those three weeks were a far cry from the May 12 week, when 20 of the sectors had ended in negative territory, 11 were positive two others showed neither a gain nor a loss on the week.

Among specific large-sized sectors during the June 2 week, lodging was the top performer, while energy exploration and production made the worst showing.

On a year-to-date basis, with 22 weeks of 2017 now in the books, health care had the best cumulative showing, supplanting lodging, which had been the champ over the previous three weeks. Automotive services did the worst for the year to date for a third straight week.

Lodging leads the way

Among the specific large-sized sectors, lodging, as noted, was the top finisher among the large-sized sectors last week, gaining 0.84%.

Other sizable sectors showing strength last week included transportation equipment manufacturing (up 0.64%), automotive services (up 0.52%), food manufacturing (up 0.49%) and health care (up 0.47%).

It was the second consecutive week among the Top Five best-performing large-sized sectors for automotive services, which had also been there during the May 26 week with a 0.96% return.

The autos grouping, largely consisting of vehicle-rental companies, have shown strength over the past two weeks but had been among the Bottom Five worst-performing major sectors for four straight weeks before that, and had the single worst showing during the May 19 week, when it lost 0.72%.

Energy E&P lags

On the downside, energy exploration and production, as noted, was last week’s worst performer among the major sectors, losing 0.41%.

It was the sector’s second straight week among the Bottom Five, having also been there during the May 26 week with a weak 0.01% gain – in contrast with the May 19 week, when it was the single best performer, gaining 0.89% that week.

The sector has now also been there six out of the last seven weeks, including the May 12 week, when it was the single worst performer among the major sectors, losing 0.96%.

Other sectors showing losses included oil and natural gas extraction (down 0.40%) and oilfield services (down 0.13%).

As with energy E&P, the oil and gas extraction sector was among the Bottom Five for a second week in a row, having also been there in the May 26 week with a meager 0.02% gain, but has now been among the big losers in six weeks out of the last seven, having seen a rare upturn in the May 19 week, when it rose by 0.71%.

With only three sectors ending in the red last week, the latest Bottom Five list was rounded out by two sectors showing considerably smaller gains than their peers – machinery and computer equipment manufacturing (up 0.08%) and petroleum refining (up 0.10%).

Health care best on year

On a year-to-date basis, health care had the strongest return (up 8.74%), grabbing the top spot after three straight weeks before that in the runner-up position.

It exchanged places with former top cumulative performer lodging (up 8.10%) – the weekly leader, as noted – which had been the best on a year-to-date basis for the prior three weeks.

They were followed by third-best chemical manufacturing (up 7.42%), fourth-best oilfield services (up 6.39%) and fifth-best depository financial institutions (up 6.04%).

Autos’ skid continues

Among the weaker year-to-date performers, automotive services (up 0.81%) and miscellaneous retailing (up 0.91%) were the worst and the second-worst, respectively, for a third straight week.

They were followed by third-worst energy E&P (up 2.01%) and by food stores and oil and gas extraction, both up just 2.29% on the week.

© 2015 Prospect News.
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