Advantage Data: Junk sectors rebound, now up in eight weeks out of last nine

By Paul Deckelman

New York, Jan. 30 – The junk bond market regained its footing in the week ended Jan. 27, after having stumbled the week before that, which had been its first loss after eight straight weekly gains, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

Before last week’s loss, sectors had been heading higher ever since decisively breaking out of a rut in late November, when they had snapped a four-week losing streak.

In the latest 10 weeks, dating back to the week ended Nov. 25, there have been nine weeks of gains versus just one week of losses during that stretch.

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 29 of those bigger sectors finishing in the black last week, versus four ending in the red.

That represented a clear comeback from the decisively negative breakdown seen the week before, ended Jan. 20, when 22 of those major sectors had posted losses, eight showed gains and three others had been unchanged on the week, showing neither a gain nor a loss.

That, in turn, was a definitive reversal from the strongly positive split the week before that, ended Jan. 13, when 29 of those major sectors were in positive territory and just four had negative readings. Similarly strong positive results had also been seen over most of the seven weeks before that.

Among specific large-sized sectors during the Jan. 27 week, oil and natural gas extraction posted the biggest gain, while automotive services had the worst loss for a second week in a row.

With four weeks now in the books for 2017, oil and gas extraction was tied with electric and gas utilities for the honor of best-performing large-sized sector so far, while automotive services was the worst performer.

Oil and gas extraction turned in the strongest performance of any large-sized sector last week, as noted, rising by 0.72% on the week.

It was the sector’s second time among the Top Five best-performing large-sized sectors in the last four weeks, O&G having also been there during the week ended Jan. 6, when it jumped by 1.47% on the week.

Also showing strength during the latest week were health care services and metals mining (both up 0.64%), energy exploration and production (up 0.54%) and oilfield services (up 0.49%).

Oilfield services has now been among the Top Five in four weeks out of the last five after a one-week hiatus, having also been there for three consecutive weeks before that, including the Jan. 13 week, when it gained 0.40%.

Energy exploration and production, on the other hand, was among the Bottom Five worst-performing significantly sized sectors during the Jan. 20 week, when it lost 0.20%.

Auto sector spins its wheels

On the downside, automotive services – chiefly consisting of vehicle-rental companies – lost 0.30% last week, the worst showing out of any of the large-sized sectors, as noted.

It was the auto grouping’s second consecutive week as the single worst-performing sector, having also had that unwanted distinction during the Jan. 20 week, when it plunged by 1.34%.

Overall, it was the sector’s third straight week of having finished in the red, having also done so during the Jan. 13 week with a 0.09% setback.

Other sectors showing losses last week were precision instrument manufacturing (down 0.12%) and the miscellaneous retailing and the securities and commodities brokers, dealers and exchanges sector, both of which were down 0.05% on the week.

It was the third week out of the last four among the Bottom Five for miscellaneous retailing, which had also been there with a 0.02% loss in the Jan. 13 week and a relatively small 0.41% gain in the overwhelmingly positive Jan. 6 week.

With just four sectors finishing in the red last week, the Bottom Five was filled out by lodging, which showed a paltry 0.04% gain on the week.

Lodging had been among the best finishers the week before, with a 0.13% rise in the Jan. 20 week, its second week in the previous three that it had made the Top Five.

Utilities, oil & gas best

On a year-to-date basis, the electric and gas utilities sector and oil and gas extraction were tied for the strongest cumulative showing so far, both at 2.57%.

They were followed by health care (up 2.48%), oilfield services (up 2.42%) – the leader during the Jan. 20 week – and chemical manufacturing (up 2.36%).

On the downside, automotive services – repeating as the week’s worst performer, as noted – fell to the bottom of the year-to-date rankings with a 0.60% loss on the year so far.

It displaced coal mining (down 0.39%) as the year-to-date cellar-dweller, after coal had been down at the bottom for the first three weeks of the year – a full reversal of how that sector had ended 2016, when coal had finished out the year with the best cumulative return (up 137.40%), holding the top spot for the last six weeks of the year and in 11 weeks out of the final 13.

Other year-to-date underachievers last week included miscellaneous retailing (up 0.01%), securities and commodities brokers, dealers and exchanges (up 0.42%) and depository financial institutions (up 0.56%).

© 2015 Prospect News.
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