Advantage Data: Lodging, deposit institutions best performers for week; refining worst

By Paul Deckelman

New York, June 7 - The high-yield market showed just modest gains in the week ended Friday, according to statistics supplied to Prospect News by Advantage Data Inc., although the upside move did extend the advance seen the previous week, ended May 28, which in turn had followed a downturn the week before that, ended May 21 - the first such loss in 14 weeks, dating back to February.

While the number of gains among the overall universe of broad-industry sectors was still definitely to the plus side in the latest week, among the more significantly sized sectors - as measured by the number of issuers, the collective number of issues and the total face amount of securities tracked - the breakdown was only slightly positive.

Top gainers among those major sectors included lodging, depository financial institutions and metals mining, while the top losers were petroleum refining, oil and gas drilling and insurance carriers.

Of the 71 broad-industry sectors into which Advantage Data currently divides its entire high-yield universe, 43 had positive returns on the week and 27 had negative results, while one sector - real estate - was at a flat 0.00% reading, showing neither a gain on the week nor a loss. Those results were about in line with those of the previous week, when 42 sectors had finished in the black, 29 were in the red and one - publishing - finished unchanged.

Of the 30 significantly sized sectors, 15 finished in positive territory this past week, with 14 in negative territory and real estate, as noted, unchanged, versus the previous week, when 19 sectors showed gains, 10 showed losses and publishing, as noted, showed neither.

On a statistical basis, the junk market's year-to-date performance, as measured by the widely followed Merrill Lynch High Yield Master II index, showed a slight decline from the previous week, when the index had moved up modestly after having slid badly the week before that.

Lodging leads the way

Lodging was the single best performer among the significantly sized sectors in the latest week, returning 0.87%. The group had also been among the best finishers the week before, when it was up 0.90%, and has now been among the best performers in three weeks out of the last four.

Other major sectors posting notable gains this past week included depository financial institutions (up 0.43%), metals mining (up 0.41%), financial brokerages and exchanges (up 0.35%), transportation equipment makers (up 0.33%) and food manufacturing (up 0.32%).

Metals mining companies had also been among the best finishers the prior week, when the sector rose 0.63%. Financial brokerages and exchanges, on the other hand, had been among the worst finishers the previous week, when the sector lost 0.93%.

Petroleum refining was the single worst performer in the latest week, losing 0.66% - a sharp comedown from the prior week, when the sector was among the best performers, gaining 0.68%.

Other big losers this past week included insurance carriers (down 0.52%), oil and gas drilling (down 0.49%), miscellaneous retailing (down 0.42%) and coal mining (down 0.30%).

Insurance carriers had, in fact, been the single worst major-sector performer the week before, when the sector lost an even 1%.

Financials top yearly results

On a year-to-date basis so far, financial sectors for the most part continue to show the strongest performance among the significantly sized sectors, led by depository financial institutions (up 10.25%), insurance carriers - despite their recent woes - (up 10.02%), non-depository institutions (up 7.79%), investment and holding offices (up 7.09%), and brokers and exchanges (up 5.71%).

Other notable cumulative gainers, with 22 weeks now in the books and 30 to go, include amusements (up 7.01%), transportation equipment manufacturing (up 5.48%), chemical makers (up 5.11%), wholesale durable goods distributors (up 4.25%), and metals mining (up 4.22%).

No major sector is yet in the red on a year-to-date basis. Cumulative returns for electric and gas services (up just 1.19%), business services (up 1.25%), miscellaneous retailing (up 1.27%), health care (up 2.08%), precision instruments makers (up 2.11%) and food stores (up 2.29%) lagged behind all of the other major sectors.

Key market indicator eases off

Looking at the overall domestic high-yield market, junk bonds, as measured by the Merrill Lynch High Yield Master II Index, were down slightly from the previous week, off by 0.05% on a one-week basis as of the close Friday to end the week with a year-to-date return of 3.294%, down from 3.346% at the early close during the abbreviated pre-holiday session the previous Friday, May 28.

The index remains well below 7.167%, the week-ending high for the year seen on April 30, and below the absolute 2010 peak level of 7.18%, seen earlier that same week. The index's low for the year was a 0.357% loss recorded the week ended Feb. 12.

The average price of a high-yield issue covered by the Master II stood at 95.198 at Friday's close, with a yield to worst of 9.24% and a spread to worst of 714 basis points over comparable Treasuries - versus a price of 95.407, a yield of 9.07% and a spread of 694 bps at the end of the previous week.

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