Bear Stearns High Yield Index returns 0.37% for week to May 5, trims year-to-date loss to 2.12%

By Paul A. Harris

St. Louis, May 6 - The Bear Stearns High Yield Index gained 0.37% during the week to May 5, with the index trimming its year-to-date loss to negative 2.12%.

The loss follows the previous week's negative 0.80% return. The index has now reported gains in 33 of the past 47 weeks.

Thus far into 2005 the number of positive-returning weeks is evenly matched with the number of negative-returning weeks, at nine apiece.

The index's yield to worst decreased by four basis points to 8.25%, while the yield to worst spread widened by five basis points to end at 443 basis points.

Bear Stearns high yield strategist Mike Taylor told Prospect News on Friday that despite Thursday's news that Standard & Poor's had downgraded Ford Motor Co. and General Motors Corp.'s debt to junk, the index held in well.

"Actually gainers outnumbered price losers by more than three to one on Thursday, as average prices returned just about plus 0.2%," Taylor said.

"Average spreads widened just five basis points to 443 basis points - at the recent wides - as both the five-year and 10 year Treasuries tightened," he added.

"I suspect there will be a lagging effect in high yield as impact of new fallen angel supply may take some time to digest and act on."

Eight of the BSIX's 11 industry sectors ended in positive territory for the week to May 5.

The week's outperformer was the utility sector which posted a 3.57% return, cutting its year-to-date loss to negative 4.50%. The sector's independent power producers (IPP) sub-sector lead the advance by returning 4.19% on the week, to lead all sub-sectors in the index for the week to May 5. The advance reduced the IPP component's year-to-date loss to negative 5.28%.

The biggest loss for the week was posted by the technology sector, which gave up 0.16%.

Ten of the 11 industry sectors remained in the red for the week to May 5. The only exception was finance, which ended the week having returned 0.04% year-to-date. Finance gained 0.05% during the latest week.

Meanwhile the biggest year-to-date gain among the sub-sectors remains that of the cellular component of the telecommunications sector: cellular has returned 4.58% thus far in 2005. It posted a 0.90% gain for the week to May 5.

The index ended the week to May 5 with a market value of $536.33 billion compared to the previous week's $537.58 billion. The number of issues increased by four to 1,762.

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