Bear Stearns Index down 2.19% in week; YTD return falls into the red

By Paul Deckelman

New York, Sept. 28 - The Bear Stearns high yield index fell 2.19% in the week ended Sept. 27, its second consecutive sizable loss following the 3.75% plunge the previous reporting period. During that previous period ended Sept., 20, the index tabluation had been shifted to capture the market's performance from the close on Monday Sept. 10 - the last session before the Sept. 11 terrorist attack - to Thursday Sept. 20 (the index normally covers one-week periods, but because of the terrorist attack on the World Trade Center and subsequent market disruption, Bear Stearns compiled the figures for the previous period for a revised stretch of time).

On a year-to-date basis, the latest weekly loss drags the cumulative return into negative territory, down 0.38%. In the previous reporting period, the cumulative return had merely been lowered to a still-positive 1.85%.

The yield-to-worst on the index widened to 14.23% in the Sept. 27 week from 13.81% previously, as the spread over Treasuries widened to 1,019 basis points from 967 basis points. The index currently covers 1,424 issues (down from 1,430 previously), having a total market value of $290.159 billion, well down from $297 billion at the end of the previous measurement period.

Ten out of the 11 broad market sectors into which Bear Stearns divides its index lost ground during the week, only slightly improved from an 11-0 negative sweep in the previous reporting period.

In the previous reporting period, the transportation group had swooned 15.07%, as its airline sub-sector nosedived an index-worst 25.38% in the wake of the Sept. 11 terrorist attack, which involved the seizure and destruction of four jetliners with all aboard, causing all flights to be grounded. But in the latest week, the broad transportation group was down just 1.49% and the airlines off 2.12% - relatively modest declines compared with other sectors.

The index more or less reverted to its usual form, with the hard-hit telecommunications sector once again the worst performer on the week, down 6.04%, while telecom's broadband access and Internet services sub-sector fell 29.73%.

The telecom sector has been chronically at or near the bottom most weeks this year. On a year-to-date basis, it easily remains the worst finisher, the latest week's poor showing widening its cumulative loss to 32.67% from 28.34% the week before. Despite a gain of 0.89% on the week - one of the strongest sub-sector performances - the paging and messaging sub-sector clearly remains the worst year-to-date return in the index, down 81.85%, only slightly improved from the 82.01% loss seen the week before.

On the upside - and there wasn't much of that to go around in the latest week - finance was the only broad sector to finish in the black during the week, when it gained 0.25%. Finance's insurance sub-sector was up an index-best 0.91% on the week.

The week before, when all broad sectors had declined, many of them sharply, energy had been the least hurt, retreating a relatively modest 0.67%. Paging and messaging had put on a rare show of strength with a 1.30% return, the only sub-sector in positive territory.

On a year-to-date basis, the consumer non-cyclicals remain the best-performing broad sector, although their return eased very slightly to 23.07% from 23.09%. Leading among individual industries is the convenience and drug retailers sub-group, one of the components of consumer non-cyclicals; they are up 79.6%, a slight pullback from the previous period's 80.62% cumulative return.

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