Bear Stearns High Yield Index gains 0.33% in week to April 20, now up 3.14% year to date

By Paul A. Harris

St. Louis, April 21 - The Bear Stearns High Yield Index gained 0.33% in the most recent week, advancing its year-to-date return to 3.14%.

The move follows the previous week's 0.08% loss.

The index has now reported gains in 64 of the past 97 weeks.

For the most recent week, the index's yield-to-worst spread tightened by a single basis point to 334 bps. The yield to worst tightened by 3 bps to 8.29%.

According to Bear Stearns high-yield strategist Mike Taylor, high yield has outperformed emerging markets and investment-grade corporate bonds recently.

That relative performance indicates to Taylor that many investors, for the time being, do not believe interest rates will move that much higher.

However, Taylor added in a Friday e-mail message, given the deliberate pace the Federal Open Market Committee has taken in terms of rate tightenings and the relatively solid outlook for high-yield credit in the medium term, high-yield investors may not be materially penalized in terms of performance over the course of the year, even if Treasury rates do move higher than some expect.

Ten of the 11 industry sectors comprising the index made positive moves during the most recent week.

The biggest positive move came from the consumer cyclical sector, which returned 0.52% on the week and advanced its year-to-date return to 4.50%. The advance was led by its automobile manufacturing-related component's 0.87% return on the week, which extended the component's year-to-date return to 6.52%.

Among the index subsectors, the biggest gain on the week to April 20 was that of the media sector's motion picture exhibition subsector, which gained 1.58% and extended its year-to-date return to 4.46%.

The only loss on the week among the index sectors was that of the transportation sector, which dropped by 0.06% and trimmed its year-to-date return to 4.65% - still the highest year-to-date return among industry sectors.

Transportation's airlines component gave up 0.57% on the week, trimming its year-to-date return to 16.03% - still by far the highest year-to-date return among all of the subsectors in the index. Transportation's airlines component represents only 0.08% of the index composite.

The second-highest return for 2006 to April 20 is that of the telecommunications sector's long distance component, which has returned an even 10% year to date, having gained 0.54% in the most recent week. The long distance component represents 0.72% of the index composite.

The market value of the index ended the week at $573.31 billion, up from the previous week's $570.55 billion. The number of issues increased by nine to 1,678 issues.

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