Advantage Data: Junk sectors show gains for 11th straight week; metals, energy areas outperform

By Paul Deckelman

New York, May 3 – The junk bond market remained solidly on the upside last week – its 11th consecutive week there, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

In the 17 weeks since the start of the year, gainers have dominated in 12 of those weeks, versus five weeks in which more negatives were seen.

Besides last week’s upturn and the ones seen in the 10 straight 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 racking up losses in five out of the first six weeks of the year.

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 30 of those bigger sectors finishing in the black in the latest week, versus two sectors ending in the red and one sector unchanged on the week, showing neither a gain nor a loss.

That follows two consecutive weeks during which 32 of those sectors had shown gains, while just one sector was showing a loss.

Among specific large-sized sectors last week, metals mining remained the top performer – its third successive week in the top spot, where it was tied with oil and natural gas extraction.

They were followed by several other energy-related sectors that more normally might be showing sizable losses.

Wholesale durable goods distributors’ modest-sized loss was still the largest of any sector for the week.

Metals mining remained the best performer so far on a year-to-date basis for a ninth straight week, while automotive services skidded to the bottom of the year-to-date rankings.

Metals, energy extend gains

Among specific large-sized sectors, metals mining turned in the best showing among the significantly sized sectors for a third week in a row, gaining 3.08% on the week, putting it in a tie with oil and gas extraction.

It was the third straight week in which both of those sectors have been among the Top Five best-performing large-sized sectors.

The metals miners had also led all of the other large-sized sectors during the weeks ended April 15 and April 24, with gains of 5.43% and 5.24%, respectively.

Oil and gas, while not the leader in those previous two weeks, had likewise been among the strongest finishers in each of them, with gains of 4.62% and 4.18%, respectively.

And that was the case as well with energy exploration and production (up 2.99%), which had similarly been among the big winners in the April 15 week, with a 4.41% advance, and again in the April 22 week, when it improved by 3.79%.

Also showing strength last week were coal mining (up 1.38%) and transportation equipment manufacturing (up 1.24%).

It was a solid turnaround for coal, which had spent the previous two weeks as the single worst-performing sector, with losses of 0.32% in the April 14 week and 8.98% in the April 22 week. However, coal had also been among the Top Five as recently as the week ended April 8, when it rose by 1.07%.

Transportation equipment makers had not been among either the big gainers or the big losers in recent weeks.

Durable goods not so good

On the downside, wholesale durable goods distributors turned in the worst weekly performance of any large-sized sector last week, posting a 0.18% loss.

The sector had recently been among neither the big losers nor the big gainers.

The only other sizable sector finishing in the red last week was automotive services, such as vehicle rental companies, among others. It was off by 0.03% on the week – the grouping’s third straight week among the Bottom Five worst-performing large-sized sectors.

With few sectors actually registering in the red over the past several weeks, as noted, auto services was among a number of sectors ending up in the Bottom Five in any given week merely by posting smaller gains than the other sectors.

In auto services’ case, that meant modest gains of 0.19% during the April 15 week and 0.34% in the April 22 week.

Chemical manufacturing was unchanged on the week, its flat 0.00% reading indicating neither a gain nor a loss during the period.

Rounding out the latest week’s Bottom Five were the securities and commodities brokers, dealers and exchanges sector, and the amusement and recreation services sector, with very modest gains, relative to most other sectors, of 0.14% and 0.16% on the week, respectively.

Neither the chemical makers, nor the financial brokers, nor the amusement providers had been among either the big gainers or losers in recent weeks.

Metals mining tops on year

On a year-to-date basis, with 17 trading weeks in the books so far for 2016, metals mining (up 34.26%) remained as the best-performing large-sized sector on a cumulative basis for a ninth straight week, once again aided by its stellar performance on the week, as noted.

Primary metals processing (up 18.67%) was in the runner-up spot, also for a ninth straight week.

Coal mining (up 13.77%) powered its way up to third-best on the year, after having not been among the big gainers previously.

Coal, in fact, had spent most of the year so far down at the bottom of the mineshaft with the worst cumulative showing of any of the large-sized sectors. However, its year-to-date performance has improved markedly over the past several weeks, not because of any dramatic improvement in the beleaguered industry’s fundamentals, which remain under pressure, but due to Advantage Data’s decision to drop Peabody Energy Corp.’s bonds from the universe of bonds it follows following the St. Louis-based U.S. coal industry leader’s Chapter 11 filing on April 13.

Energy exploration and production (up 13.40%) moved up to fourth-best, despite not having been among the cumulative leaders the week before.

Midstream energy services (up 13.01%) fell by two positions in the rankings, to just fifth-best on the year from third-strongest during the April 22 week.

Besides metals mining, the coal mining and energy exploration and production sectors were among the week’s best performers as well, as noted.

Autos lag on year

On the downside, automotive services (up 1.85% on the year) had the weakest showing of any large-sized sector on a year-to-date basis.

The sector slipped by four full notches in the standings, from merely fifth-worst the week before.

Paper manufacturing (up 2.61%) fell to second-worst on the year, despite not having been among the worst losers the week before.

Building construction (up 2.97%) improved, relatively speaking, to just third-worst on the year, after having been the worst cumulative performer the week before.

It displaced holding companies and other investment offices (up 3.33%), which also thus showed some slight improvement in relative terms, moving up to just fourth-worst from third-worst the week before.

And depository financial institutions (up 3.40%) were fifth-worst on the year, an improvement from second-worst the week before.

Automotive services, as noted, was also among the week’s worst finishers.

© 2015 Prospect News.
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