Advantage Data: Electronic, transport manufacturing, business services lead most sectors higher

By Paul Deckelman

New York, July 6 - Bonds of a majority of high-yield industry sectors were solidly in the black in the abbreviated pre-holiday trading week ended Thursday, according to statistics supplied to Prospect News by Advantage Data Inc.

It was the second consecutive week advancing sectors outpaced decliners, as the junk market attempted to break way from the choppy, inconsistent pattern seen over the previous four weeks, when positive and negative weeks alternated.

In the latest week, among the more significantly sized broad-industry sectors and subsectors - as measured in terms of the number of issuers, the collective number of issues and the total face amount of bonds tracked - manufacturing was strong, with hefty advances in such areas as electronics, transportation equipment, metal production and chemicals. Business services notched notable gains, and there was also strength in some financial sectors such as real estate, securities brokerages and non-depositary institutions.

On the downside, few sectors in general and none of the significant-sized sectors finished in the red. Major sectors showing relatively weak performances included publishing, depositary financial institutions like banks, food stores and paper manufacturing.

Of the 68 broad-industry sectors into which Boston-based Advantage Data currently divides its high-yield universe, 57 showed positive returns in the week ended Friday, while 11 had negative returns - a substantial improvement from the previous week, ended June 26, when 39 sectors finished in the black, against 31 in the red.

Electronic manufacturing leads way

The electronics manufacturing broad-industry sector had the biggest gain among the significantly sized groupings, jumping 4.17% - a sharp turnaround from the week before, when it lost 1.61%, the worst of any significant sector.

Other strong manufacturing groupings included transportation equipment - dominated by its automotive component - up 2.37%; metals production, up 1.49%; chemical manufacturing, up 1.34%; petroleum refining, up 1.09%; and coal mining, up 1.07%. Business services advanced 3.39%, while telecommunications rose 1.17%.

Among the financials, real estate was up 2.24%, securities brokerages and exchanges up 1.56% and non-depositary institutions, like mortgage bankers and credit unions, up 1.32%.

Publishing putters along

On the downside, there were no significantly sized sectors in negative territory this week. Publishing had the weakest return, up 0.16%, following by depositary institutions, up 0.17%, grocery stores, up 0.21%, and paper manufacturing, up 0.38%.

Real estate, brokerages still lead on year

Advantage Data reported that the real estate sector - one of the week's biggest winners - was the biggest gainer on a year-to-date basis, up 83.33%, followed closely by the securities brokerages sector, another weekly standout, up 79.83% for the year. Rental-heavy automotive services had a 42.43% cumulative return.

On the downside, no significantly sized sectors were in the red year to date. Only one - depositary financial institutions, one of the week's weaker finishers - was in the single-digits on a percentage basis, at 7.57%.

Market rebound seen

Looking at the overall domestic high-yield market, as measured by the widely followed Merrill Lynch High Yield Master II Index, junk - which had a 0.095% decline in the previous week, its second retreat in a row and cutting its year-to-date return to 28.72% - bounced back with a 1.24% advance for the week ended Thursday, which lifted its year-to-date return to an even 30%.

The average price of a high-yield issue covered by the Master II stood at 79.93 at Thursday's close, with a spread to worst of 1,037 basis points over comparable Treasuries and a yield to worst of 12.95% - versus a price of 77.21, a spread of 1,092 bps and a yield of 13.50% the week before.

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