Advantage Data: Junk sectors post fourth straight gain, up in nine weeks out of last 10

By Paul Deckelman

New York, Feb. 21 – The junk bond market posted its fourth consecutive gain last week (ended Feb. 17), according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

Last week’s gain, and the advances the week before, ended Feb. 10, and in the two weeks before that, ended Feb. 2 and Jan. 27, came as the market rebounded after having stumbled during the week ended Jan. 20, which had been its first loss after eight straight weekly gains. Before that loss, the sectors had been heading higher ever since decisively breaking out of a rut in late November, when they had snapped a four-week-long losing streak.

In the latest 10 weeks, dating back to the week ended Dec. 16, 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 24 of those bigger sectors finishing in the black last week. Eight of those larger sectors ended in the red, and one sector was unchanged on the week, showing neither a gain nor a loss.

That was a slight deterioration from the Feb. 10 week, when 27 of those sectors had shown gains, while five of the sectors posted losses and one sector was unchanged on the week.

In each of the two weeks before that, 29 of those sectors had ended in positive territory; during the Feb. 3 week, three of the sectors had shown a loss and one sector was unchanged, while during the Jan. 27 week, four of the larger sectors showed losses, with no sectors unchanged.

The past four weeks have represented a clear comeback from the decisively negative breakdown seen during the Jan. 20 week – the most recent negative week – when 22 of those major sectors had posted losses, only eight showed gains and three others had been unchanged on the week.

Among specific large-sized sectors during the Feb. 17 week, coal mining posted the biggest gain – its second time in the top spot in the last three weeks – while metals mining had the worst loss.

With seven weeks now in the books for 2017, oilfield services was the best-performing large-sized sector on a year-to-date basis so far for a third week in a row, while the food stores grouping was the worst cumulative performer.

Coal cooking again

Coal mining turned in the strongest performance of any large-sized sector last week, as noted, rising by 1.19% on the week. It was coal’s third consecutive week among the Top Five best-performing large-sized sectors, and its second week in the last three at the very top of the pile.

It had also gained 0.58% during the Feb. 10 week and 0.82% in the Feb. 3 week, the best of any major sector.

Also showing strength during the latest week were chemical manufacturing (up 0.76%), insurance carriers (up 0.64%), lodging (up 0.47%) and business services (up 0.45%).

It was the third straight week that chemical manufacturing finished among the Top Five; like coal, it had also been there during the Feb. 10 week and the Feb. 3 week with returns of 0.59% and 0.74%, respectively.

Metals mining mauled

On the downside, metals mining, as noted, turned in the worst performance of any of the key sectors, plunging by 1.80%.

Other sectors ending in the red this week included energy exploration and production (down 0.33%), oil and natural gas extraction (down 0.20%), precision instrument manufacturing (down 0.12%) and holding companies and other investment offices (down 0.09%).

It was the second straight week among the Bottom Five for energy E&P, which had also been there during the Feb. 10 week with a 0.06% loss, and the third successive week among the underachievers for oil and gas extraction, which had also been there during the Feb. 10 week with a 0.07% downturn and during the Feb. 3 week with a meager 0.01% return – a decided comedown from the Jan. 27 week, when the sector had been the best large-sized performer of all with a gain of 0.72% on the week.

After a week-long hiatus, the precision instrument manufacturers – a sector largely comprised of medical device makers – have now been in the Bottom Five in two weeks out of the last three, having also ended there during the Feb. 3 week with a 0.08% loss.

Oilfield services again best

On a year-to-date basis, oilfield services had the strongest cumulative showing so far, at 6.69%, the sector’s third straight week in the top slot.

That was followed by chemical manufacturing (up 4.38%), its third consecutive week in the runner-up position, and after that, by primary metals processing (up 3.37% – its second week in a row in that Number-Three slot), lodging (up 3.09%) and machinery and computer manufacturing (up 2.96%).

Chemical manufacturing and lodging, as noted, were also among the week’s strongest performers.

On the downside, food stores (down 1.89%) fell to the bottom of the barrel on a year-to-date basis, displacing miscellaneous retailing (down 0.07%), which had been the year-to-date rankings cellar dweller for two weeks in a row before that.

They were followed by sectors posting relatively smaller year-to-date gains than their peers, including food manufacturing (up 0.85%), automotive services (up 0.98%) and precision instrument manufacturing (up 1.04%).

The latter sector, as noted, was also among the week’s worst laggards.

© 2015 Prospect News.
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