Advantage Data: Junk sectors show gains for sixth straight week; energy sectors firmest

By Paul Deckelman

New York, March 28 – The junk bond market stayed in positive territory last week – its sixth 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 seventh week out of the last 10 in which more sectors were posting gains than losses.

In the 12 weeks since the start of the year, gainers have dominated in seven of those weeks, versus five weeks in which more negatives were seen.

Besides last week’s upturn and the ones seen in the five weeks before that, going back to the week 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.

A subset consisting of the 33 largest 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 21 of those sectors finishing in the black in the latest week, versus 12 sectors ending in the red.

That represented a modest retreat from the more strongly positive trend which had been seen over the previous five weeks, during which over 30 of those sectors had posted gains in each of those five weeks, including the previous three straight weeks, and four weeks out of the five, during which 32 out of the 33 sectors had ended on the upside for the week, with just one declining sector in each of those weeks.

That marked a nearly complete reversal of the breakdown seen during the week 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 last week, coal mining – usually a major loser – was, atypically, the top performer among the significantly sized sectors, pushing energy exploration and production out of the top spot it had held for the two previous weeks.

It was the fourth straight week in which several energy-related sectors moved up strongly, with generally stronger crude oil prices lately.

Metals mining had the largest weekly loss among the key sectors.

However, despite their respective performances last week, metals mining still remained the best performer so far this year for a fourth straight week, while coal stayed at the bottom of the year-to-date rankings for a sixth week in a row.

Coal makes a comeback

Among specific large-sized sectors, coal mining had the best week, jumping by 3.36% in an unusual show of strength. While coal was among neither the biggest gainers nor the biggest losers over the previous two weeks, it has mostly been in the latter category most weeks of this year so far.

Other energy-related issues were also showing strength last week, their fourth week of robust gains. These included oil and natural gas extraction (up 1.96%), energy exploration and production (up 1.78%) and oilfield services (up 1.19%).

It was the third straight week among the Top Five best-performing large sectors for energy E&P, which, as noted, included the previous two weeks right at the top, with index-leading returns of 4.97% in the week ended March 11 and 4.34% during the week ended March 18.

It was the fourth straight week there, meanwhile, for oil and gas extraction and oilfield services, which had posted returns of 3.81% and 2.67%, respectively, during the March 18 week.

Food stores (up 1.05%) was the sole non-energy sector making it into the Top Five last week, despite having not been among either the big gainers or lowers over the previous several weeks.

Metals miners mauled

On the downside, metals mining was the worst finisher among the sizable sectors last week, retreating by 1.02%, in contrast with the strength that the sector had shown over the previous few weeks.

Also finishing among the Bottom Five worst-performing large-sized sectors last week were telecommunications (down 0.80%), non-computer electronics manufacturing (down 0.59%), printing and publishing (down 0.58%) and health care (down 0.28%).

It was the second straight week among the underperformers for health care, which had also been there the week before with a modest 0.38% gain, when most other sectors did far better than that.

While printing and publishing had not been among the big losers during the March 18 week, it has now had that unwanted honor in three weeks out of the last four.

The electronics producers and telecom companies had not been among either the biggest losers or the big gainers over the previous few weeks.

Metals mining tops on year

On a year-to-date basis, the best-performing sizable sectors stayed in the exact order of ranking, relative to each other, for a third straight week last week.

After 12 trading weeks so far in 2016, metals mining (up 16.09%) remained as the best-performing large-sized sector on a cumulative basis for a fourth straight week, after having displaced miscellaneous retailing from the top spot after that latter sector had a six-week run up there.

Primary metals processing (up 10.52%) was in the runner-up spot for a fourth straight week.

Miscellaneous retailing (up 8.29%) and lodging (up 6.77%) were in the third- and fourth-best positions, respectively, also for a fourth 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 6.21%) was fifth-best on the year for a third week in a row.

None of the year-to-date leaders were also among the week’s best finishers, though metals mining, as noted, was the week’s single worst performer.

Coal remains YTD worst

On the downside, coal mining (down 15.01%), despite having put up the best gain of any large sector last week, remained the absolute worst on a year-to-date basis for a sixth consecutive week. It has now been the cellar-dweller in eight weeks out of the last nine.

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 2.95%) moved down by one notch, from only third-worst on the year to second-worst, putting it back on familiar ground; it has now been the second-worst large sector in six weeks out of the last seven, including in four straight weeks at one point.

It switched places with oil and gas extraction (down 2.76%), which was also back in familiar territory at third –worst on the year; it has now held that slot in five weeks out of the last six, including a stretch of four straight weeks, and on a longer-term basis, in 20 out of the last 25 weeks.

Food stores (down 2.37%) were fourth-worst on the year for a second straight week, after having only been fifth-worst for two straight weeks before that.

Chemical manufacturing (down 1.74%) was fifth-worst on the year for a second week in a row.

None of the worst year-to-date laggards were also among the week’s worst finishers, though coal mining, as noted, was the week’s single best performer.

© 2015 Prospect News.
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