Advantage Data: Junk sectors stay down in latest week, marking third straight loss

By Paul Deckelman

New York, Dec. 28 – The junk bond market maintained its recently negative pattern last week, racking up its third 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’ seventh losing week out of the past eight, 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.

Over the last 10 weeks, going back to the week ended Oct. 23, more sectors have been worse in seven of those weeks, versus three weeks during which more sectors have been better.

On a somewhat longer-term basis, with 51 weeks now in the books so far this year, 28 weekly advances have been recorded during that time, versus 22 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 20 of those sectors in the red and 13 in the black on the week.

That did represent a modest improvement from the week before, ended Dec. 18, when 28 of those key sectors had shown losses and just five had shown gains.

The week before that, ended Dec. 11, was a virtual clean sweep into negative territory, with 32 of those sectors ending on the downside, none finishing on the upside and only one sector unchanged on the week, showing neither a gain nor a loss.

Among the specific large-sized sectors, energy exploration and production showed the biggest loss of any of those sectors for a second straight week.

Non-computer electronics 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 50 consecutive weeks.

Lodging held onto the top spot for the year to date for a second week in a row and for a 42nd week out of the last 43.

Energy E&P biggest loser

Advantage Data showed the energy exploration and production sector as the worst-performing large-sized sector last week, as it slid by 6.36%.

It was the energy E&P grouping’s second straight week holding that dubious distinction; it had also been down at the bottom during the week ended Dec. 18 with a 6.43% loss.

Last week also marked the E&P sector’s seventh straight week among the Bottom Five worst-performing large-sized sectors, and its ninth week there in the last 10, a stretch of futility interrupted only by a rare show of strength during the week ended Nov. 6 that improbably and temporarily landed E&P among the Top Five best-performing large-sized sectors.

Two other energy-oriented sectors shared that exact same trajectory – oil and gas exploration (down 5.85%) and coal mining (down 5.38%).

Both have now been in the Bottom Five for seven straight weeks, having been there the week before with losses of 7.35% and 5.90% respectively, and both have now also been there in nine weeks out of the last 10.

The latest week’s worst performers also included midstream energy (down 1.59%) and metals mining (down 1.46%).

Metals mining has now been among the Bottom Five for six straight weeks and midstream energy for three weeks. They posted losses of 3.67% and 2.77%, respectively, during the Dec. 18 week.

Electronics makers charged up

On the upside, manufacturers of electrical and electronic equipment, other than computers, did the best of any large-sized sector in the latest week, posting a 0.95% gain.

Also showing relative strength last week were telecommunications (up 0.37%), transportation equipment manufacturing (up 0.34%), food manufacturing (up 0.27%) and printing and publishing (up 0.26%).

Telecom and food manufacturing have now both been in the Top Five for two straight weeks, having landed there the previous week with gains of 0.29% and 0.08%, respectively. Telecom has now been there in three weeks out of the past four.

Neither the electronics manufacturers, the transportation equipment makers or the printers and publishers had been among the best finishers during the Dec. 11 week.

YTD: Lodging again the leader

On a year-to-date basis, all of the best-performing sectors were unchanged last week, relative to one another, from the positions they had held the week before.

The lodging sector (up 16.51%) was the top performer for a second consecutive week and for the 42nd week out of the last 43. The hoteliers had held that top spot for 40 consecutive weeks, a winning streak dating back to the week ended March 6, that was finally snapped during the week ended Dec. 11, when the food stores sector temporarily supplanted lodging due to a statistical glitch, which was quickly reversed during the Dec. 18 week.

Food stores (up 5.64%) were in the runner-up spot for a second straight week.

Depository financial institutions were in third place for a third consecutive week with a 5.47% cumulative return. The depositories have now been in third place in eight weeks out of the last nine and in 11 weeks out of the last 14.

Automotive services (up 5.45%) was fourth-best for a third week in a row.

Securities and commodities brokers, dealers and exchanges (up 5.20%) held down fifth place in the rankings, also for a third successive week. It has now been fifth-best in six weeks out of the last eight.

None of those year-to-date leaders were also among the week’s best gainers.

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 five 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 50th straight week with a 34.04% year-to-date loss.

The energy E&P sector was down 27.89% year to date, leaving it second-worst on the year for a 12th straight week.

Oil and gas extraction (down 25.31%) was third-worst on the year, also for a 12th straight week.

Metals mining (down 17.65%) was fourth-worst on the year for a sixth straight week and for a ninth week out of the last 10.

That was also the case with primary metals processing (down 12.42%), which was fifth-worst on the year for a sixth consecutive week and for a ninth week in the last 10.

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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