Advantage Data: Junk sectors post fourth straight gain following four-week losing streak

By Paul Deckelman

New York, Dec. 19 – The junk bond market made it four straight weeks on the upside last week (ended Dec. 16), after having decisively broken out of its recent rut in late November by snapping a four-week-long losing streak, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

Those four weeks of losses, running through the week ended Nov. 18, had, in turn, followed five straight weeks of gains before that, lasting through the week ended Oct. 21.

On a somewhat longer-term basis, in the 50 weeks since the start of the year, gainers have dominated in 37 of those weeks, versus 13 weeks in which more negatives were seen.

A subset consisting of the 33 largest 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 18 of those bigger sectors finishing in the black last week, versus 15 ending in the red.

That represented a deterioration from the super-strong pattern seen the week before, ended Dec. 9, when all 33 of those key sectors had shown gains, with none showing losses.

The most recent four weeks represent virtually a complete reversal from the week ended Nov. 18, when 29 of the sectors had ended in negative territory, versus only three sectors ending on the plus side, as well as one unchanged sector showing neither a gain nor a loss on the week.

Among specific large-sized sectors last week, oilfield services posted the biggest gain, while chemical manufacturing had the worst loss.

Coal mining was the best year-to-date performer for a fourth straight week and on a longer-term basis for nine weeks out of the last 11.

Health care services was the worst year-to-date performer so far for a second week in a row.

Oilfield services lead

Oilfield services, as noted, turned in the strongest performance last week of any large-sized sector, rising 0.97% on the week.

It was the second week among the Top Five best-performing large-sized sectors in the last three weeks for oilfield services, which had also been there during the Dec. 2 week with a 2.03% return.

Also showing strength during the latest week were petroleum refining (up 0.73%), transportation equipment manufacturing and oil and natural gas extraction (both up 0.54%) and energy exploration and production (up 0.47%).

As was the case with weekly leader oilfield services, the petroleum refining sector was also among the Top Five for a second week in the last three weeks, having also been there during the Dec. 2 week with a 0.80% return.

It was the fifth straight week that oil and gas extraction was among the Top Five; during the Dec. 9 week, O&G was actually the best-performing major sector, with a 2.06% gain, its second week in the top spot out of the prior three.

Energy E&P has now been among the Top Five for a second time in the past three weeks and a fourth time in the last five weeks. It was up by 2.16% in the week ended Dec. 2.

Chemical makers clobbered

Chemical manufacturing (down 0.83%) had the most sizable loss among the large-sized sectors last week.

While the sector had been among the best-performing industry groupings the week before, when it had gained 1.89%, it also has now been among the Bottom Five worst-performing sectors in two weeks out of the last three, including the week ended Dec. 2, when it had lost 1.82%.

Also underperforming in the latest week were telecommunications and paper manufacturing (both down 0.35%), food manufacturing (down 0.32%) and automotive services (down 0.29%).

It was the fourth straight week among the Bottom Five for the paper makers, which had also been there the week before with a sedate 0.29% gain, among the smallest returns of any large sector.

On the other hands, telecom had spent the previous week among the Top Five, with a 1.41% gain in the Dec. 9 week.

Coal still best on year

Coal mining remained clearly the best year-to-date performer among the large-sized sectors for a fourth straight week and a ninth week out of the last 11, with a 109.85% cumulative return.

It was followed by metals mining (up 67.21%), energy exploration and production (up 43.46%), oil and gas extraction (up 41.95%) and primary metals processing (up 32.68%) – the third consecutive week during which those sectors had finished in that exact same 1-to-5 order seen the week before.

Health care worst on year

Health care remained at the bottom of the year-to-date rankings for a second consecutive week with just an even 5.00% return on the year.

Other cumulative underperformers were automotive services (up 6.23%), chemical manufacturing (up 6.77%), food stores (up 7.27%) and precision instrument manufacturing (up 7.33%).

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