B of A High Yield Large-Cap Index rolls to seventh straight gain, up 0.73%

By Paul Deckelman

New York, Dec. 3 - The Banc of America High Yield Large Cap Index posted its seventh consecutive gain in the week ended Friday Nov. 29, as it rose 0.73% on the week. In the week ended Nov. 21, it had jumped 3.32% (changes in the index and in other Bank of America indices are normally calculated on a Friday-to-Thursday basis, but the indices were delayed a day this past week due to the Thanksgiving holiday on Thursday Nov. 28).

The High Yield Large Cap Index's year-to-date loss narrowed to 4.02% - the lowest it has been since the week ended June 20, when the cumulative loss for the year stood at 3.19%. In the week ended Nov. 21, the year-to-date loss had stood at 5.22%. Over the past seven weeks, the year-to-date loss has sharply receded from its peak cumulative loss for the year, the negative 15.68% return recorded in the week ended Oct. 10.

The index's spread over Treasuries and yield to worst both continued to narrow in the most recent week to 965 basis points and 13.09%, respectively (versus 977 basis points over and 13.14% in the previous week).

The steady gains seen over the last seven weeks - including big gains seen in two of the last four weeks - have gone a big way toward bringing the index's performance for the year more closely into line with its showing at the end of 2001, when the B of A market measure suffered an approximate 3% loss for the full year. The spread at the end of 2001 was somewhat over 900 basis points off Treasuries and its year-end yield-to-worst was above 13.50%.

Banc of America sees the index, which tracks issues of $300 million and over, as a reliable barometer of trends in the overall high yield market of over $500 billion.

The bank's High Yield Broad Market Index, which includes issues of $100 million or more, meantime, continued to gain in the most recent week, firming 0.66%, and had a spread of 970 basis points and a 12.96% yield-to-worst, versus the previous week's jump of 2.37%, its 985 basis points spread and 13.06% yield-to-worst. The HY Broad Market Index's year-to-date performance swung back into the black (a 0.33% gain) after several months of showing a loss. The week before, the cumulative measure had been off 0.77% for the year.

Continuing the trend seen over the last several weeks, the latest week's advance was broad-based. While not matching the showing of the previous week - when none of the 27 industry sectors into which B of A divides its HY Broad Market Index had negative returns - in the most recent week, only two sectors were actually negative and the other 25 were on the plus side.

The best performing sector in the high-yield universe in the week ended Nov. 29 was the international wireline telecommunications operators, with a 2.73% gain. In the week ended Nov. 21, PCS/cellular companies had been the top performer for a second straight week, with a 7.47% gain.

The second-strongest performer in the most recent week was international wireless operators, up 2.11%, followed by North American cable - one of the largest and most influential sectors in the index - which was up 2.05%. In the week before, the domestic cablers had been the second-strongest performer, with a 6.67% gain.

Another big sector, domestic wireline (up 1.47%) and consumer non-cyclical companies (up 1.20%) rounded out the Top Five list of the best-performing sectors in the most recent week. The domestic wirelines had also made it the previous week, when they rose 5.44%.

On the downside, only the transportation group - dragged lower by the continuing troubles of the airline industry - was really a big loser in the most recent week, falling 2.96%. The week before, the transportations had posted a paltry 0.76% gain while most other sectors were up far more, winning the group a place on the Bottom Five list of the weakest-performing sectors. Energy issues, with just a 0.31% gain, had been the worst finisher the week before.

Non-ferrous metals and mining was off 0.16% in the most recent week. The Bottom Five was rounded out by three sectors posting relatively small gains, relative to most other groupings - steel (0.16%), and gaming and ad-dependent media (both ahead 0.18%). Steel and gaming had also made it into the Bottom Five the week before, when they were up a modest 0.97% and 0.59%, respectively.

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