B of A High Yield Large-Cap Index up 1.37% in week; YTD loss cut to 4.06%

By Paul Deckelman

New York, Nov. 12 - The Banc of America High Yield Large Cap Index was up for a fifth consecutive week, returning strong 1.37% in the week ended Nov. 9. That came on the heels of a 0.19% gain the week before. The Index's cumulative loss for the year so far narrowed to 4.06% in the latest week from 5.36% the week before.

In the most recent week, the Index's spread over Treasuries narrowed to 1,022 basis points from 1,043 the previous week, and its yield-to-worst likewise fell to 13.98% from 14.17%.

In the most recent week, the Index tracked 339 issues with a total market valuation of $134.109 billion, versus 341 issues worth $132.316 billion the week before. 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 nearly $600 billion.

The best performer among the three credit tiers into which B of A divides its index was the middle tier (issues rated BB-, B+ and B, comprising 51.32% of the Index), with a 2.03% return on the week. The top credit tier - issues rated BB+ and BB (23.60% of the Index) - was next with a 1.30% return, while the lowest tier - bonds rated B- and below (25.09% of the Index), lagged with a paltry 0.04% return. The order of finish was a reversal of the pattern of the last several previous weeks, which saw the lowest-rated issues - which had been the most badly beaten losers when the market fell sharply in September - having made the most dramatic recoveries and posting the largest gains.

In the most recent week, finance issues rose 8.49% driven by a strong rebound in Conseco Inc. bonds, which were up some 13 points, as the Carmel, Ind.-based insurer's debt bounced back on news that CEO Gary Wendt and other executives had personally bought large blocks of the company stock. Those bonds had been battered during the previous two weeks on investor reaction to disappointing third-quarter numbers, which had helped drive finance down to the worst-performing sector the previous week, with a 6.12% loss. The best-performing issue the previous week had been international wireline telecommunications operators, with an 8.49% return.

Chemical issues, up 3.47%, were the second-strongest performers in the most recent week, with gains in Lyondell Chemical's 10 7/8% and 9 5/8% notes providing the winning formula. PCS/cellular issues (up 3.00% on strength in Nextel Communications paper), satellite services (up 2.65%) and technology (up 2.45%) rounded out the list of the week's Top Five best performers; the satellite and technology sectors had also been in that select group the week before, with returns of 3.85% and 3.54%, respectively.

On the downside, non-ferrous metals and mining issues were the weakest group, down 1.98% as Glencore Nickel's 9% senior notes fell sharply after Moody's Investors Service issued an update on the company, confirming its current ratings but attaching a negative outlook to them. As previously noted, finance issues had been the worst performers the previous week.

Domestic wireline was down 0.77%, as XO Communications Inc, and McLeod Communications Inc debt retreated. The week before, the group had been among the top finishers, up 2.35%.

Advertising dependent media (down 0.42% on losses by Emmis Communications paper), transportation (down 0.41%) and steel (down 0.28%) rounded out the Bottom Five worst finishers for the latest week; steel had also been among the worst laggards the week before, when it was down 2.49%.

End

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