Advantage Data: Junk sectors plunge across the board in latest week, continues negative pattern

By Paul Deckelman

New York, Dec. 21 – The junk bond market maintained its recently negative pattern last week, racking up its second consecutive downturn, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It was the sectors’ sixth losing week out of the past seven, a skid interrupted only during the week ended Dec. 4, when they had snapped a four-week losing streak that dated back to the week ended Nov. 6.

Those losses, in turn, had followed a four-week string of gains dating back to the week ended Oct. 9.

Junkbondland, generally speaking, has been choppy and sloppy ever since the end of a long upward surge in early May, with the market after that having experienced periods of several weeks of gains alternating with a couple of weeks of losses and, during the week ended Sept. 18, one week which saw the sectors evenly split, with neither gains nor losses having the edge.

With 50 weeks now in the books so far this year, 28 weekly advances have been recorded during that time, versus 21 weeks on the downside and the aforementioned one evenly split week.

A subset of the 33 most significantly sized sectors (out of the total of 60 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe), as measured by the number of bond issuers, the collective number of issues tracked and their total face amount outstanding, showed 28 of those sectors in the red and five in the black on the week.

That did represent a modest improvement from the week before, ended Dec. 11, where there was a virtual clean sweep into negative territory, with 32 of those sectors posting losses, no sectors showing any gains and one sector unchanged on the week, showing neither a gain nor a loss.

That stood in sharp contrast to the previous week, ended Dec. 4, when 20 of those more sizable sectors moved higher on the week, with the other 13 sectors moving lower.

Among the specific large-sized sectors, energy exploration and production showed the biggest loss of any of those sectors.

Chemical manufacturing did the best of any of the sizable sectors.

Coal mining remained by far the worst-performing big sector on a year-to-date basis, where it has been for the last 49 consecutive weeks.

Lodging reclaimed its position in the top spot for the year to date after having been narrowly edged out the previous week after 40 straight weeks as the leader.

Energy E&P does the worst

Advantage Data showed the energy exploration and production sector as the worst-performing large-sized sector last week, as it slid by 6.43%.

It was the energy E&P groupings’ sixth straight week among the Bottom Five worst-performing large-sized sectors; it had also been there during the Dec. 11 week with a 10.05% loss.

It has now also been in the Bottom Five in nine weeks out of the last 10, a stretch of futility interrupted only by a rare show of strength during the week ended Nov. 6 that improbably landed it among the Top Five best-performing large-sized sectors.

Two other energy-oriented sectors shared that exact same trajectory – oil and gas exploration (down 7.35%) and coal mining (down 5.90%).

Both had been in the Bottom Five the week before with losses of 8.44% and 14.96%, respectively. Coal’s loss was bad enough to earn the unwanted honor of worst large-sized sector, where it had been in three weeks out of the previous five up to that point.

The latest week’s worst performers also included metals mining (down 3.67%) and midstream energy (down 2.77%).

Metals mining has now been among the Bottom Five for five straight weeks and midstream for two weeks. They posted losses of 5.49% and 3.50%, respectively, during the Dec. 11 week.

Chemical makers back on top

On the upside, chemical manufacturing (up 1.76%) did the best of any large-sized sector, regaining the leading position that it has now held in four weeks out of the last five, with the Dec. 11 the sole exception.

Also showing relative strength last week were securities and commodities brokers, dealers and exchanges (up 0.46%), telecommunications (up 0.29%), food manufacturing (up 0.08%) and automotive services (up 0.07%).

Telecom and automotive services have now both been in the Top Five in two weeks out of the last three, with the automotive credits also there in three weeks out of the last five.

Neither the food manufacturers not the brokers, dealers and exchanges were among the worst laggards during the Dec. 11 week.

YTD: Lodging again the leader

On a year-to-date basis, the lodging sector (up 18.69%) was back on its usual perch as the top performer, after having been nosed out the week before; lodging now has led the large-sized sectors on a cumulative basis in 41 out of the past 42 weeks.

Food stores (up 6.00%) moved down by one position to second-strongest of the list, after having temporarily dethroned lodging on a statistical glitch.

Depository financial institutions were in third place for a second consecutive week with a 5.54% cumulative return. The depositories have now been in third place in seven weeks out of the last eight and in 10 weeks out of the last 13.

Automotive services (up 5.39%) was fourth-best, also for a second week in a row.

Securities and commodities brokers, dealers and exchanges (up 5.04%) held down fifth place in the rankings, also for a second successive week. It has now been fifth-best in five weeks out of the last seven.

Only the automotive services and brokers, dealers and exchanges sectors were also among the week’s leading performers.

YTD: Coal still buried

On the downside, all of the worst sectors were unchanged last week, relative to one another, from the positions they had held during the previous four weeks, dating back to the week ended Nov. 20.

Coal mining continued to wallow at the bottom of the pile as the worst year-to-date performer, in that position for a 49th straight week with a 35.83% year-to-date loss.

The energy E&P sector was down 28.90% year to date, leaving it second-worst on the year for an 11th straight week.

Oil and gas extraction (down 25.14%) was third-worst on the year, also for an 11th straight week.

Metals mining (down 16.26%) was fourth-worst on the year for a fifth straight week and for an eighth week out of the last nine.

That was also the case with primary metals processing (down 12.95%), which was fifth-worst on the year for a fifth consecutive week and for an eighth week in the last nine.

All of those worst-lagging year-to-date sectors but primary metals were also among the week’s worst finishers, as noted.

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