Advantage Data: Junk sectors post second straight gain after two losing weeks

By Paul Deckelman

New York, Feb. 29 – The junk bond market stayed in positive territory last week – its second consecutive week there after two straight weeks before that in which it had been mired deeply in the red, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

However, it was the third week out of eight so far this year in which more sectors were posting gains than losses.

Besides last week’s upturn and the one the week before, ended Feb.19, the sectors had also done better during the week ended Jan. 29, after having started the new year with three straight weeks on the downside and six weeks out of the prior seven showing losses.

On a slightly longer-term basis, last week was the fourth week of the last 10, dating back to Dec. 25, in which more sectors were posting losses rather than gains.

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 was decidedly more negative in recent weeks, other than the gains the past two 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 30 out of the 33 having finished in the black during the week ended Friday with just a single sector closing in the red.

That essentially extended the nearly clean sweep seen the week before, when 32 out of the 33 bigger sectors closed in positive territory, against just one negative.

That, however, had been a nearly complete reversal of the breakdown seen the week before, ended Feb. 12, when all 33 of the large-sized sectors had posted losses, against no gains.

Among the specific large-sized sectors, metals mining had the best gain on the week, while coal mining suffered the worst loss for a second straight week.

Coal thus stayed at the very bottom of the year-to-date rankings for a second week in a row, while miscellaneous retailing was on top for a sixth successive week.

Metals mining strongest

Among specific large-sized sectors, metals mining had the best return on the week, jumping by 5.32%. It was the metals miners’ second straight week among the Top Five best-performing large-sized sectors – they were also there in the Feb. 19 week with a 3.02% rise, and they have now been among the elite finishers in four weeks out of the last five.

Other sectors showing strength last week included lodging (up 2.72%), transportation equipment manufacturing (up 2.48%), midstream energy (up 2.37%) and securities and commodities brokers, dealers and exchanges (up 2.27%).

It was the second straight week in the Top Five for midstream energy, which in fact had been the single best performer in the Feb. 19 week with a 4.81% gain.

Although they were not among the leaders the week before, lodging has now been among the Top Five in two weeks out of the last three.

Neither transportation equipment manufacturing nor the broker, dealers and exchanges sector have been among either the best finisher or the worst in at least the previous two weeks.

Coal carnage continues

On the downside, coal mining posted its second index-leading big loss in as many weeks, plunging by 16.55%, on top of its 10.33% swoon during the Feb. 19 week.

It was the was fifth week out of the last seven in which coal was the absolute worst-finishing large-sized sector, as well as its 16th straight week in the Bottom Five. On a longer-term basis, coal has now been among the Bottom Five in 19 weeks out of the last 20 – all but the week ended Nov. 6.

Other sectors showing losses in the latest week were petroleum refining (down 01.3%) and wholesale durable goods distributors (down 0.05%).

With only those three sectors actually finishing in the red this week, as noted, the week’s Bottom Five list of the worst-performing large-sized sectors was filled out by sectors showing relatively modest gains versus their higher-gaining peers – paper manufacturing (up 0.31%) and oilfield services (up 0.42%).

None of the other Bottom Five sectors besides coal had been among either the biggest losers or the biggest winners over the prior two weeks.

Retailers best for year

After eight trading weeks so far in 2016, miscellaneous retailing (up 3.64%) is the best-performing large-sized sector on a cumulative basis, its sixth consecutive week in the top spot.

Lodging (up 3.57%) was in the runner-up spot for a fifth 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.

Primary metals processing (up 3.98%) firmed by one notch in the rankings to third-best on the year so far from just fourth-best the week before.

Metals mining (up 2.93%) and the brokers, dealers and exchanges sector (up 1.62%) improved enough to claim the Number-Four and Number-Five slots, despite not having been among the year-to-date leaders the week before.

Metals mining, lodging and the brokers, dealers and exchanges sector were also among the weekly leaders, as noted.

Coal remains YTD worst

On the downside, the five worst-performing sectors on a year-to-date basis stayed in the exact order of ranking, relative to each other, that they had held during the Feb. 19 week.

Coal mining (down 30.79%) was the absolute worst on a year-to-date basis for a second consecutive week. It has now been the cellar-dweller in four weeks out of the last five.

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.

Energy exploration and production (down 27.94%) was second-worst on the year for a second straight week and for a third week in the last four.

Oil and gas extraction (down 25.08%) was third-worst on the year, also for a second consecutive week; on a longer-term basis, O&G has now been third-worst in 17 weeks out of the last 21.

Oilfield services (down 13.54%) was fourth-worst on the year for a fifth consecutive week.

Midstream energy (down 6.49%) was fifth-worst for a third week in a row.

Coal mining and oilfield services were also among the week’s worst finishers, as noted.

© 2015 Prospect News.
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