Advantage Data: Junk bond sectors remain strongly positive for fourth straight week

By Paul Deckelman

New York, March 14 – The junk bond market stayed in positive territory last week – its fourth 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.

It was the fifth week out of 10 so far this year in which more sectors were posting gains than losses.

Besides last week’s upturn and the ones seen in the three weeks before, ended Feb.19, Feb. 26 and March 4, 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.

For a second week in a row, 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 nearly a clean sweep last week, with 32 out of the 33 having finished in the black during the week ended Friday and just a single sector closing in the red.

It was the fourth straight strongly positive week with 30 or more of those larger sectors ending in positive territory; during the Feb. 26 week, the breakdown was 30 gains versus three losses, while in the Feb. 19 week, the positive split was again 32-to-1.

That earlier week marked a nearly complete reversal of the breakdown seen the week before, ended Feb. 12 – the most recent negative week – when all 33 of the large-sized sectors had posted losses, against no gains.

Among the specific large-sized sectors, energy exploration and production had the best gain on the week – the second straight week in which several oil and natural gas-related sectors moved up strongly, in line with robust gains in world crude prices amid hopes for output cuts by major producers and a global economic upturn.

Printing and publishing was the only sector actually showing a loss on the week, breaking a three-week run by coal mining as the worst weekly finisher.

Coal, however, did stay at the very bottom of the year-to-date rankings for a fourth week in a row.

Metals mining – also up during the week on hopes that big buyer China and perhaps other global economies might show improvement – was the top year-to-date finisher for a second straight week.

Energy E&P strongest sector

Among specific large-sized sectors, energy exploration and production had the best return of any large-sized sector on the week, jumping by 4.97%, helped by the strong upturn in world oil prices, despite having not been among the leaders the week before, ended March 4.

Also showing strength in the latest week were oil and natural gas extraction (up 4.91%), oilfield services (up 3.57%), petroleum refining (up 2.91%) and metals mining (up 2.01%).

It was the second straight week that oil and gas extraction and oilfield services finished among the Top Five best-performing large-sized sectors; both had also been there in the March 4 week with returns of 4.61% and 5.96%, respectively, with oilfield services actually the best-performing large sector of all.

Metals mining has now been among the Top Five for four straight weeks, having also made it the previous week with a 5.57% gain, and has now been among the elite finishers in six weeks out of the last seven.

Printing gets pummeled

On the downside, printing and publishing, as noted, was the only sizable sector actually finishing in the red last week, losing 0.72%. It was the sector’s second straight week among the Bottom Five worst-performing large-sized sectors, having also been there the week before, when most sectors likewise showed gains, with a modest 0.49% return.

For a second straight week, with only one sizable sector actually in negative territory, last week’s Bottom Five list was filled out by sectors showing only modest gains on the week versus their higher-gaining sector peers.

These included amusement and recreation services (up 0.11%), securities and commodities brokers, dealers and exchanges (up 0.17%), food manufacturing (up 0.24%) and depository financial institutions (up 0.27%).

None of the latter four had been among the big losers the week before.

Metals miners best for year

On a year-to-date basis, the best-performing sectors largely stayed in the exact order of ranking, relative to each other, last week that they had held the previous week.

After 10 trading weeks so far in 2016, metals mining (up 14.96%), on the strength of its robust performance over the last four weeks, remained as the best-performing large-sized sector on a cumulative basis for a second straight week, after having displaced miscellaneous retailing from the top spot the week before after the latter had a six-week run there.

Primary metals processing (up 9.47%) was in the runner-up spot for a second straight week.

Miscellaneous retailing (up 6.38%) and lodging (up 5.38%) were in the third- and fourth-best positions, respectively, for a second straight week. The retailers, as noted, had previously been in the Number-One position for six weeks, and lodging had been Number-Two for five straight weeks previously. 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.

Midstream energy services (up 4.07%) moved up to fifth-best on the year, despite having not been among the year-to-date leaders in recent weeks.

For a second consecutive week, metals mining, as noted, was also among the week’s best finishers last week – the only one of the year-to-date leaders to have done so.

Coal remains YTD worst

On the downside, the 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 prior week.

Coal mining (down 18.93%) was the absolute worst on a year-to-date basis for a fourth consecutive week. It has now been the cellar-dweller in six weeks out of the last seven.

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 11.28%) was second-worst on the year for a fourth straight week and for a fifth week in the last six.

Oil and gas extraction (down 9.29%) was third-worst on the year, also for a fourth consecutive week; on a longer-term basis, O&G has now been third-worst in 19 weeks out of the last 23.

Oilfield services (down 2.93%) was fourth-worst on the year for a seventh consecutive week.

Food stores (down 2.40%) were fifth-worst on the year for a second week in a row.

None of the week’s worst finishers were among the worst year-to-date performers last week, although for a second week in a row, oilfield services and oil and gas extraction remained among the big losers for the year despite strong enough performances to be among the week’s biggest gainers, as noted.

© 2015 Prospect News.
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