Advantage Data: Junk sectors in first fall after six straight gains

By Paul Deckelman

New York, March 13 – The junk bond market moved sharply lower last week, ended March 10, breaking a string of six weeks before that during which it headed to the upside, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

That now-ended six-week winning streak, which started during the week ended Jan. 27 and then ran through the week ended March 3, came as the market rebounded after having stumbled during the week ended Jan. 20.

The decline was its first loss after eight weekly gains. And before that loss, the sectors had been heading higher since decisively breaking out of a rut in late November, when they had snapped a four-week-long losing streak.

Last week marked only the second weekly loss so far this year, versus eight weekly gains since the start of 2017.

On a somewhat longer-term basis, in the 52 weeks of 2016, gainers dominated in 39 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 all 33 of those bigger sectors finishing in the red last week, with none in the black.

That clean sweep represented a decisive reversal of the pattern of strength seen over the previous six weeks, including most recently the week ended March 3, when 27 of those major sectors had posted gains and six posted losses.

Among specific large-sized sectors during the March 10 week, automotive services and energy exploration and production were tied for the worst loss; the automotive services grouping thus went from first to worst, having been the best performing sector during the March 3 week.

With all 33 large-sized sectors ending in the red last week, real estate showed the smallest loss on the week.

With 10 weeks now in the books for 2017, oilfield services remained the best-performing large-sized sector on a year-to-date basis so far for a sixth week in a row, while food stores fell to the bottom as the worst cumulative performer so far.

Auto services sink to worst

Automotive services, consisting largely of vehicle-rental companies, and energy exploration and production each turned in the worst performance of any large-sized sector last week, as noted, both plunging by 1.94%.

It was energy E&P’s fifth straight week among the Bottom Five large-sized sectors and its second week in a row as the worst of the worst. During the March 3 week, it had nosedived 1.27%, the biggest loss of any of the key sectors.

Automotive services, on the other hand, had the dubious honor of having gone from first to worst.

During the March 3 week, the grouping had turned in the single best showing of any large-sized sector with a 1.99% gain, which had been the sector’s second consecutive week among the Top Five large-sized sectors. It had also been there during the Feb. 24 week with a 0.62% gain. Auto services had thus been among the Top Five in three weeks out of the prior four, before turning southward last week.

Other underachievers in the latest week included oil and natural gas extraction (down 1.93%), oilfield services (down 1.60%) and petroleum refining (down 1.57%)

It was oil and gas extraction’s sixth straight week in the Bottom Five. Tt had also been there during the March 3 week with a 1.01% loss.

It was oilfield services’ second consecutive week among the big losers, having also been there in the March 3 week with a 0.13% downturn.

Real estate posts smallest loss

With all 33 of the significantly sized sectors posting losses last week, there was no upside as such. The week’s Top Five ranks were filled by sectors showing relatively smaller losses versus their sector peers.

Real estate led the way in this regard, with a relatively benign 0.22% loss on the week.

It was followed by paper manufacturing (down 0.46%), lodging (down 0.49%), food manufacturing (down 0.52%) and building construction (down 0.55%).

Oilfield services again best

On a year-to-date basis, oilfield services – despite having been one of the week’s worst performers, as noted – had the strongest cumulative showing so far, at 4.69%, the sector’s sixth straight week in the top slot.

The other strong year-to-date performers were second-best healthcare services (up 4.53%), third-best durable goods distributors (up 4.18%) fourth-best chemical manufacturing (up 4.16%) and fifth-best lodging (up 3.85%).

Lodging, as noted, was also among the week’s strongest performers.

On the downside, food stores (down 2.07%) had the worst year-to-date loss of any large sector.

It was followed by second-worst energy exploration and production (down 1.43%), third-worst miscellaneous retailing (down 0.80%), fourth-worst oil and natural gas extraction (down 0.13%) and fifth-worst precision instrument manufacturing (down 0.11%)

Energy E&P and oil and gas extraction, as noted, were also among the week’s worst laggards.

© 2015 Prospect News.
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