Advantage Data: Junk sectors continued rise last week with ninth straight gain

By Paul Deckelman

New York, Oct. 16 – The junk bond market maintained its recent upside momentum last week, ended Oct. 13, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

The market posted its ninth consecutive upturn after having seen a decisive loss during the week ended Aug. 11. That loss – the only setback in the last 10 weeks – had been the first loss the sectors had seen since the week ended July 7, and it snapped a prior four-week winning streak.

For the year to date, a majority of the sectors have finished on the plus side in 34 weeks so far, while losses have dominated in just seven weeks.

For a second consecutive week, 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 27 of those sectors ending in the black last week, with just six finishing in the red, the same breakdown seen during the week ended Oct. 6, although there were a few different sectors finishing on the downside.

In both of the two weeks before that, ended Sept. 22 and Sept. 29, some 29 of those major sectors had posted gains, versus only four sectors showing losses.

In contrast, during the most recent losing week – the Aug. 11 week – fully 31 of the large-sized sectors were in retreat, and only two of the sectors managed to eke out tiny advances.

Among specific large-sized sectors during the week ended Oct. 13, food stores led all the sectors for a second week in a row, while health care was at the absolute bottom of the pile.

On a year-to-date basis, with 41 weeks of 2017 now in the books, lodging held the top spot on a cumulative basis for a 12th straight week, while the food stores grouping – despite its solid weekly performance – remained the year-to-date cellar-dweller for a third week in a row.

Food stores stay firm

As noted, the food stores category – despite its continued poor showing on a cumulative basis – was the top-performing large-sized sector during the Oct. 13 week, returning 0.75% during that period.

It was the second straight week that the grocers had beaten all of the other key sectors, having also been on top during the Oct. 6 week with a 0.81% return.

It was the third time in the last four weeks that the supermarket operators had been among the Top Five best-performing large-sized sectors, having also been among those elite finishers during the Sept. 22 week with a 0.64% gain.

However, the sector remains volatile, having also recently spent the Sept. 29 week among the Bottom Five worst-performing large-sized sectors with a 0.17% loss. And in late August and early September, food stores were a fixture among those underachievers, including the weeks ended Sept. 8 and Sept. 15, when the sector was the worst performer of any of the key sectors with losses of 0.47% and 1.80%, respectively.

Other sectors showing strength in the most recent week included energy exploration and production (up 0.39%), oil and natural gas extraction (up 0.37%), building construction (up 0.30%) and midstream energy companies (up 0.24%).

Neither energy E&P nor oil and gas extraction had been among the top finishers during the Oct. 6 week when, in fact, exploration and production had been in the Bottom Five with a 0.09% loss that week. But apart from that lapse, both energy sectors have now been among the Top Five in five weeks out of the last six, with oil and gas extraction having been the absolute best finisher for three consecutive weeks – during the Sept. 15 week, when it shot up by 1.11%, the Sept. 22 week, when it rose by 0.95% (sharing top honors that particular week with energy E&P), and in the Sept. 29 week, when it jumped by 1.28%. E&P had meantime been up a solid 0.99% during that Sept. 29 week.

Health care gets hit

On the downside, health care lost 0.54% last week, the worst of any major sector, pushed lower in the wake of sizable declines in hospital issues on Friday, which followed news of presidential executive orders making changes in the existing Affordable Care Act, popularly known as Obamacare.

It was the fourth straight week that the health care names had been among the worst performers, having also been in the Bottom Five during the Oct. 6 week, when the sector lost 0.19%; the Sept. 29 week, when it gained just 0.05%; and the Sept. 22 week, when it eased by 0.01%.

Chemical manufacturing – a sector which includes biotechnology and pharmaceutical manufacturers who may be affected by changes in the health care laws – lost 0.52% last week, its second straight week among the losers – it had also been down by 0.16% during the Oct. 6 week.

Other major sectors posting losses last week included miscellaneous retailing (down 0.61%), paper manufacturing (down 0.17%) and coal mining (down 0.12%).

After a hiatus during the Oct. 6 week, miscellaneous retailers have now been among the Bottom Five sectors, in four weeks out of the last five, having also had that unwanted honor during the weeks ended Sept. 15, Sept. 22 and Sept. 29 with losses those weeks of 0.20%, 0.44% – the worst of any key sector during that Sept. 22 week – and 0.14%, respectively.

It was the fourth straight week among the worst laggards for paper manufacturing, which had in fact been the single worst-performing large-sized sector in the Sept. 29 week (down 0.27%) and the Oct. 6 week (down 0.72%). The grouping had also lost 0.05% during the Sept. 22 week.

Last week was a comedown for coal mining, which had been among the Top Five finishers in the Oct. 6 week, with a 0.66% return.

Lodging still tops for year

On a year-to-date basis, lodging (up 15.38%) was the top cumulative performer for a 12th straight week and for the 16th time out of the last 17 weeks.

For the second time in the last three weeks, metals mining (up 9.84%) was the year-to-date runner up, again displacing the usual holder of that Number-Two slot, chemical manufacturing.

Those cumulative leaders were followed by third-best primary metals processing (up 9.70%), fourth-best chemical manufacturing (up 9.30%), which before last week had been the second-best performing large sector year to date in seven weeks out of the previous eight and in nine weeks out of the prior 11; and fifth-best building construction (up 8.68%).

Food stores keep faltering

On the downside, food stores – despite their strong weekly performance, as noted – remained the worst year-to-date performer among the major sectors for a third straight week, for six weeks out of the last seven and for nine weeks out of the last 12, showing a 1.38% loss on the year.

Miscellaneous retailing (down 0.07%) was second-worst for the year so far for a third straight week and for a fourth week out of the last five.

Those were the only two key sectors in the red for the year so far.

Those underperformers were joined by third-worst coal mining (up 1.01% for the year), fourth-worst energy exploration and production (up 3.04%) and fifth-worst oil and natural gas extraction (up 3.15%).

© 2015 Prospect News.
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