Bear Stearns High Yield Index down 1.00% in 2002, starts 2003 on positive note

New York, Jan. 3 - The Bear Stearns High Yield Index ended 2002 with a loss of 1.00% for the year.

That negative return made it the fifth consecutive year in which returns were less than the average coupon, according to a report by Bear Stearns & Co. analyst Michael Taylor. In 2001 the index returned 5.41%, in 2000 it lost 6.81%, in 2009 it showed a positive 2.30% performance and in 1998 the return was 2.08%. The year before that, 1997, the index recorded a 13.64% performance.

The overall loss for 2002 came despite a strong showing in the fourth quarter during which the index gained 7.61%, rising 10.95% from its low on Oct. 10. November's 6.61% rise was the third highest monthly return ever, according to Taylor.

December's performance was 0.96%.

For the year, the best performing sector was consumer cyclicals with a positive 10.95% return.

In the other direction, telecommunications was the laggard among the 11 industry sectors into which Bear Stearns divides the index, returning negative 33.58%.

By narrow sub-sector, the leader was "other consumer cyclical," up 14.94%, while last place was taken by long distance with a negative 69.00% performance.

The index ended the year with a market value of $352.215 billion in 1,525 issues.

The yield to worst was 12.51% while the yield-to-worst spread was 958 basis points.

During December eight investment-grade issues with $18.7 billion outstanding were added to the index after being downgrade to junk by both Moody's Investors Service and Standard & Poor's. El Paso Corp with $12.7 billion face value was the biggest followed by Delhaize America at $2.9 billion.

In total the year saw $122 billion of fallen angels, according to Bear Stearns' Taylor, compared to $57 billion of new issuance.

For the coming year, Bear Stearns is dividing the utility component of the index into sub-sectors since it now represents $41 billion or 12% of the total market weight.

Meanwhile the index started 2003 on a positive note, up 0.31% for the year through Jan. 2 and 0.35% for the week ending Jan. 2.

For the week to Jan. 2, the top performing sector was technology, up 0.82%, while the bottom position was taken by transportation, down 0.61%.

Of the narrow sub-sectors, number one position for the week went to 2002's worst group, long distance, which rose 11.63%. (Technology is not sub-divided.)

Heading down, freight containers-shipping was the worst performer, slipping 2.56%.

The index ended the week with a market value of $352.354 billion in 1,521 issues, both up significantly from the week before when it had a value of $335.972 billion in 1,483 issues.

The yield to worst was 12.44% and the yield-to-worst spread contracted 22 basis points to 929 basis points.

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