Advantage Data: Junk bond sectors post first loss after six straight weekly gains

By Paul Deckelman

New York, May 16 – The junk bond market finally headed south last week, ended May 12, after having posted six straight weekly advances before that, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News by Advantage Data Inc.

It was the first time that more of the significantly sized sectors were on the downside than finished on the upside since the week ended March 24.

While the sectors saw smooth sailing throughout April, after a mostly choppy March of alternating up and down weeks, things turned considerably more turbulent as May opened up.

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 20 of those sectors ending in the red last week, with 11 sectors in the black and two other sectors showing neither a gain nor a loss on the week.

That represented a clear deterioration from the week before, ended May 5, when the sectors had just barely stayed in positive territory, with 17 of them finishing with gains on the week, versus 16 posting losses.

That week, even while still actually ending in the black, was a far cry from the overwhelming strength seen the week before that, ended April 28, when all 33 of those bigger sectors finished with gains and no sectors were showing losses during the week.

Among specific large-sized sectors during the May 12 week, chemical manufacturing was the top performer for a second straight week, while energy exploration and production had the biggest loss on the week.

On a year-to-date basis, with 19 weeks of 2017 now in the books, lodging had the best cumulative showing. Miscellaneous retailing was the weakest year-to-date performer for a fifth consecutive week, and was the only major sector in the red on that basis.

Chemical climb continues

Among the specific large-sized sectors, chemical manufacturing, as noted, turned in the best showing last week, its second consecutive week at the top. It gained 0.65% last week, on top of the 0.90% gain the week before.

Other sizable sectors showing strength last week included health care services (up 0.40%), depository financial institutions (up 0.29%), printing and publishing (up 0.22%) and miscellaneous retailing (up 0.21%).

Besides the chemical makers, it was also the second straight week among the Top Five best-performing large-sized sectors for health care and for the depository financials, which were also there during the week ended May 5 with returns of 0.40% and 0.39%, respectively.

Energy E&P has biggest loss

On the downside, energy exploration and production had the biggest loss among any large-sized sector last week, finishing down 0.98%. It was the fourth straight week that E&P was among the Bottom Five worst-performing large-sized sectors, including the 1.05% loss the grouping suffered during the May 5 week.

Other major sectors posting sizable losses last week included oil and natural gas extraction (down 0.81%), electric and natural gas utilities (down 0.48%), automotive services (down 0.45%) and oilfield services (down 0.40%).

It was the second consecutive week among the Bottom Five for both the oilfield services and the utilities, having both been there during the May 5 week with respective downturns of 0.49% and 0.53%. Oilfield services have now been there in three weeks out of the last four, and the utilities have now been there in four weeks out of the last five.

It was the third week in a row among the big losers for automotive services; the sector, mostly comprised of vehicle rental companies, was in fact the worst-performer among any large-sized sector during the May 5 week, when it lost 1.14%.

And oil and gas extraction, like Energy E&P, has now been in the Bottom Five for four successive weeks, including the May 5 week, when it fell by 0.91%.

Lodging tops on year

On a year-to-date basis, the lodging sector checked in with the best 2017 cumulative performance so far, returning 7.17%.

The hoteliers moved up one notch to the top spot after three consecutive weeks in the runner-up slot, and displaced oilfield services, which had been the year-to-date leader for the previous seven straight weeks and for 13 out of the prior 14 weeks.

Health care services (up 5.92%) moved into the Number-Two position after three straight weeks during which it had been third-best on the year.

Oilfield services (up 5.55%), fell two notches in the year-to-date rankings, to just third-best, after having been at the top for seven straight weeks before that, as noted.

Wholesale durable goods distributors (up 5.00%) were fourth-best on the year for a second consecutive week.

Industrial machinery and computer manufacturers (up 4.74%) moved up to fifth-best on the year so far.

Retailers worst on year

On the downside, miscellaneous retailing (down 0.57%) was the worst year-to-date performer last week – the sector’s fifth consecutive week enjoying that unwanted honor. It was also the only significantly sized sector in the red on a cumulative basis last week.

Other key sectors posting just relatively small cumulative returns last week included automotive services (up 0.63%), its second straight week in the second-worst position; precision instrument manufacturing, also up just 0.63%; energy E&P (up 0.92%) and oil and gas extraction (up 1.09% on the year so far).

© 2015 Prospect News.
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