Bear Stearns High Yield Index gains 1.09%, year-to-date return now 8.87%

New York, Nov. 5 - The Bear Stearns High Yield Index jumped 1.09% higher in the week to Nov. 4, pushing the year-to-date return up to 8.87%.

The gain follows the previous week's 0.79% gain. The index has now reported gains in 18 of the past 21 weeks.

"We continue to see demand for yield," said Bear Stearns & Co. high-yield analyst Mike Taylor.

He added that low defaults, as well as a more gradual than feared pace in the rise in interest rates, were continuing to add to the attractiveness of high yield.

All 11 of the industry sectors making up the index showed positive returns in the week.

For the second consecutive week, the transportation sector led the way, advancing 1.99% on a 4.05% gain in its airlines component, which made that the strongest of its sub-sectors.

However, transportation remains the worst performing sector so far in 2004 with a 7.17% loss, while airlines is the bottom ranked sub-sector with a 22.69% loss.

Finance showed the smallest gain of the 11 sectors, adding 0.82% in the seven days, lifting its gain since Jan. 1 to 6.50%. Its "other finance" component was the only loser among all the sub-sectors in the index, ending the week down 0.19%.

Taylor said that specialty finance companies and real estate investment trusts that are not industry-specific fall into the "other finance" category, adding that finance companies, insurance companies and banks are typically not high-yield issuers, with the exception of fallen angels. He also said the negative performance of the sub-sector for the week seemed to be trading related instead of credit specific.

Basic materials is the top sector for 2004 to date with a 12.52% total return after adding 1.02% in the week just completed.

Textile and apparel remains the number one sub-sector at 25.54% after moving 1.38% higher for the week.

The index's yield to worst ended the week at 6.93%, 30 basis points lower than the previous week's 7.23%. The yield-to-worst spread was 363 basis points, 30 basis points narrower on the week.

The index ended the week to Nov. 4 with a market value of $541.72 billion in 1,705 issues, up from the previous week's $536.86 billion in 1,703 issues.

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