Advantage Data: Junk sectors deep in the red after one weekly upturn, fifth down week of year

By Paul Deckelman

New York, Feb. 16 – The junk bond market stayed deeply in negative territory last week, its second straight week there after one week before that on the upside, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

It was the fifth week out of the six weeks since the start of the year during which more sectors were posting losses for the week than were showing gains.

Before the one winning week, ended Jan. 29, the sectors had also been on the slide for the previous three consecutive weeks, dating back to the start of the year, and in six weeks out of the prior seven.

On a slightly longer-term basis, last week was the eighth week out of the last 10, dating back to Dec. 11, in which more sectors were posting losses rather than gains.

Besides the Jan. 29 week, the only other positive week during that long stretch was the holiday-shortened week ended Dec. 31.

Junkbondland, generally speaking, had been choppy ever since the end of a long upward surge in early May of last year; after that, the market mostly experienced periods of several weeks of gains alternating with a couple of weeks of losses, although the market turned decidedly more negative in recent weeks, as indicated.

A subset of the 33 most significantly sized sectors (out of the total of 61 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 a clean sweep on the downside, with all 33 having finished in the red during the week ended Friday and none closing in the black.

That represented a deterioration from the previous week, ended Feb. 5, when 27 of the large-sized sectors had posted losses, with just five showing gains.

That, in turn, was a clear reversal from the Jan. 29 week, when 24 of those major sectors had ended in positive territory, while nine of them were on the negative side.

Among the specific large-sized sectors, energy exploration and production suffered the biggest loss among the sectors for a second consecutive week. With no sectors actually finishing in the black last week, as noted, food manufacturing showed the most relative strength by posting the smallest weekly loss.

On a year-to-date basis, with six weeks in the books for the year so far, energy E&P also had the worst showing in that regard, with miscellaneous retailing on top for a fourth week in a row.

Energy E&P on the bottom

Among specific large-sized sectors, energy exploration and production had the worst return of any large-sized sector on the week, nosediving by 16.86% on the week.

It was the E&P sector’s second straight week as the biggest loser, following its 6.84% slide during the Feb. 5 week.

It was also E&P’s sixth straight week among the Bottom Five worst-performing large-sized sectors; the sector has now been among the worst laggards in 13 weeks out of the last 14 – all but the week ended Dec. 31.

Also posting notable losses during the week were oil and natural gas extraction (down 14.19%), coal mining (down 13.42%), oilfield services (down 5.27%) and midstream energy services (down 4.04%).

As was the case with energy E&P, oil and gas extraction, which had lost 5.28% in the Feb. 5 week, has now been among the Bottom Five for six straight weeks, and for 13 weeks out of the last 14, except for the Dec. 31 week.

Last week meanwhile was coal mining’s 14th straight week in the Bottom Five, including the Feb. 5 week, when it lost 4.22%; it had also been the single worst finisher in each of the three straight weeks before that, ended Jan. 29, Jan. 22 and Jan. 15, with losses of 13.86%, 9.61% and 14.54%, respectively. Coal has now been among the Bottom Five in 17 weeks out of the last 18 – all but the week ended Nov. 6.

Oilfield services, after a hiatus of one week, has now been among the Bottom Five in four weeks out of the last five.

Midstream energy was there for a second week in a row, having also been among the big losers in the Feb. 5 week with a 1.45% downturn.

Food manufacturers outperform

With all 33 of the larger-sized sectors showing losses last week, as noted, there was no upside as such; the week’s Top Five list of the best-performing sectors was populated by those having the smallest losses, relative to their considerably worse-performing peers.

Chief among these was food manufacturing (down 0.18%). It was the sector’s second consecutive week among the Top Five, having also been there in the Feb. 5 week with a 0.11% gain. The food firms have now been among the Top Five in four weeks out of the last five.

Other sectors showing relatively modest losses last week included real estate (down 0.54%), health care (down 0.61%), miscellaneous retailing (down 0.70%) and lodging (down 0.74%).

It was the second straight week among the elite finishers for both real estate and miscellaneous retailing, which had been there in the Feb. 5 week with gains of 0.33% and 0.34%, respectively. The retailers have also now been there in five weeks out of the last six.

After a one-week pause, health care has now been among the better names in three weeks out of the last four.

Lodging was among neither the big gainers nor the big losers in the last two weeks.

Retailers best for year

After six trading weeks so far in 2016, miscellaneous retailing (up 2.28%) is the best-performing large-sized sector on a cumulative basis, its fourth consecutive week in the top spot.

Lodging (up 0.35%) was in the runner-up spot for a third straight week, after having spent the three weeks before that as third-best. In 2015, lodging had been the single-best finisher on the year, gaining 18.92%, on the strength of having held that exalted position over the last three weeks of the year and on a longer-term basis, in 43 out of the last 44 weeks of 2015.

With all of the sectors having suffered losses in the latest week, the other year-to-date leaders last week were those with the smallest cumulative losses so far.

Health care (down 0.59%) was third-best for a third week in a row.

Real estate (down 0.96%) moved up by one notch in the year-to-date rankings to fourth-best large-sized sector from fifth-best the week before.

Food manufacturing (down 1.17%) improved, relatively speaking, to fifth-best on the year, despite having not been among the leaders the week before.

All five of the year-to-date leading sectors also had the smallest weekly losses, as noted.

Energy E&P worst on the year

On the downside, energy exploration and production (down 34.48%) fell by one notch in the rankings, to the absolute worst large-sized sector on the year so far from second-worst in the Feb. 5 week and third-worst in the Jan. 29 week. It had also spent the two weeks before that, ended Jan. 15 and Jan. 22, as the absolute worst cumulative performer, for a total of three weeks out of the last five.

Oil and gas extraction (down 30.93%) dropped by one slot to second-worst on the year from only third-worst the week before that; the oil and gas sector has now been second-worst in four weeks out of the last five. When it was only third-worst in the Feb. 5 week, it was the sector’s 15th week out of the previous 18 in that position, including 14 straight weeks at one point.

Coal mining (down 22.47%) managed to move up by two positions, to just third-worst on the year, after having been the cellar-dweller for two straight weeks before that.

Coal had actually started out the new year during the week ended Jan. 8 as only second-worst on the year, then improved, relatively speaking, to just third-worst in the Jan. 15 week and to fifth-worst in the Jan. 22 week, before finally heading for the bottom of the mineshaft during the weeks ended Jan. 29 and Feb. 5.

Before all of that, coal had ended 2015 as the absolute worst performer for the year, with a 35.31% loss, having had the biggest cumulative loss for 51 straight weeks last year. Coal had also been the single-worst large-sized performer in 2012, 2013 and 2014 as well.

Oilfield services (down 13.94%) was fourth-worst on the year for a third consecutive week.

Midstream energy (down 7.35%) fell to fifth-worst, despite not having been among the worst cumulative performers the week before.

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

© 2015 Prospect News.
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