Advantage Data: Junk sectors up for second straight week after rare plunge in early May

By Paul Deckelman

New York, May 24 – The junk bond market moved higher last week – its second consecutive weekly advance after having posted its first losing week after 11 consecutive weeks on the upside before that, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News by Advantage Data Inc.

In the last 10 weeks, gains have been seen in nine of them, with the retreat during the week ended May 6 the only setback during that time.

On a somewhat longer-term basis, in the 20 weeks since the start of the year, gainers have dominated in 14 of those weeks, versus six weeks in which more negatives were seen.

As noted, 11 of those better weeks came during the winning streak which began during the week ended Feb. 19 and had extended through the week ended April 29. Besides that long string of gains, and the improvements seen over the last two weeks, 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 then 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 62 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 19 of those bigger sectors finishing in the black last week, versus 14 sectors ending in the red.

While definitely staying in positive territory, that clearly represented a weakening from the strong stance seen during the week ended May 13, when 28 of those sectors had posted gains for the week and just five had suffered losses.

That prior week, in turn, had been a solid turnaround from the May 6 week, when 27 of those large-sized sectors ended in negative territory, just five had shown gains, and one sector was unchanged on the week, showing neither a gain nor a loss.

Among specific large-sized sectors last week, several energy and metals sectors – which had shown remarkable strength over the previous few weeks before tumbling to the very bottom during the May 6 week and posting the worst losses that week – remained back on top as a group for a second straight week last week, led by energy exploration and production and oil and natural gas extraction.

On the downside, oilfield services – which actually had been the best-performing large-sized sector during the May 13 week – went from first to worst last week, putting up the biggest weekly loss on any of the sectors.

Metals mining remained the best performer so far on a year-to-date basis for a 12th straight week, while amusement and recreational services was the weakest year-to-date performer.

Energy, metals stay strong

Among specific large-sized sectors, the energy exploration and production and oil and natural gas extraction sectors turned in the best performance of any large-sized sector last week, both of them gaining 1.43% on the week.

It was the second consecutive week that both of those groupings were among the Top Five best-performing large-sized sectors, having also been among that elite circle during the May 13 week with gains of 1.28% and 0.95% respectively; both sectors have now been in the Top Five in five weeks out of the last six, turning in downside performances during the May 6 week.

Also showing strength during the latest week were chemical manufacturing (up 0.95%), metals mining (up 0.89%) and midstream energy services (up 0.69%).

It was a big improvement for the chemical companies, which had actually been the May 13 week’s single worst-performing sector, losing 0.47% that week, its second week in the previous three during which the sector was among the Bottom Five worst-performing large-sized sectors.

The metals miners, on the other hand, were in the Top Five for a second consecutive week and for their fifth week in the last six.

Midstream energy services were not among the big gainers over the previous several weeks.

Oilfield services at bottom

On the downside, oilfield services had the worst loss of any large-sized sector last week, falling by 0.75%. on the week – a sharp deterioration from the May 13 week, when it had actually been the strongest of any large-sized sector, with a 1.61% gain that week.

Thus the sector had the unwanted honor of having gone from first (in the May 13 week) to worst (last week), a relatively uncommon event. It has now been among the Bottom Five in two weeks out of the last three, having also been there during the May 6 week with a 1.87% loss.

Also showing notable losses last week were miscellaneous retailing (down 0.39%), petroleum refining (down 0.38%), food stores (down 0.33%) and non-depository credit institutions (down 0.30%).

It was the second straight week among the Bottom Five for the food stores sector, which had been there the week before with a 0.10% loss.

The miscellaneous retailers, refiners and non-depository credit grantors had not been among the big losers the week before.

Metals mining tops on year

On a year-to-date basis, with 20 trading weeks in the books so far for 2016, metals mining (up 31.56%) remained as the best-performing large-sized sector on a cumulative basis for a 12th straight week, helped by its strong weekly performance, as noted.

However, coal mining (up 27.88%) jumped into second place on a year-to-date basis after not having been among the cumulative leaders before.

Earlier in the year, coal mining had consistently been among the weakest sectors in the index, but it has improved over the past month after Advantage Data dropped the deeply distressed bonds of Peabody Energy Corp. from inclusion in the securities it tracks, following the St. Louis-based coal mining giant’s Chapter 11 filing in mid-April.

Coal’s ascension pushed primary metals processing (up 18.73%) down by one notch in the rankings to third place, after having occupied the runner-up slot over the previous 11 weeks.

Energy exploration and production (up 14.12%) held steady at fourth-best for a second straight week and a third week out of the last four.

Oil and gas extraction (up 14.10%) got bumped by two notches down to just fifth-best, after having been third-strongest the week before.

Amusements lag on year

On the downside, amusements and recreational services (up 1.62%) had the weakest showing of any large-sized sector on a year-to-date basis, despite having not been among the worst cumulative performers before.

Holding companies and other investment offices (up 2.75%) fell to second-worst, after having been only fourth-worst in two weeks out of the previous three.

Depository financial institutions (up 3.13%) weakened to third-worst on the year so far, after having only been fifth-worst the week before for three consecutive weeks.

Non-computer electronics manufacturing (up 3.28%) was fourth-worst, after having not been among the major losers the week before.

Chemical manufacturing (up 3.28%) improved by four full notches, to just fifth-worst on the year so far after having been the worst cumulative finisher the week before.

© 2015 Prospect News.
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