Advantage Data: Junk sectors post second straight gain after loss, up in eight weeks out of last 10

By Paul Deckelman

New York, May 30 – The junk bond market continued its winning ways last week, ended May 26, posting its second consecutive weekly gain, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

The sectors were rebounding after having been mostly lower during the week ended May 12, which had been their first loss after six consecutive weeks before that on the upside, dating back to the week ended March 31.

Last week marked the sectors’ eighth positive week out of the last 10 weeks, dating back to the week ended March 24.

While the sectors had seen smooth sailing throughout April, after a mostly choppy March of alternating up and down weeks, things turned more turbulent for most of May.

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 31 of those sectors ending in the black last week, with only two sectors in the red.

That was in line with the week before, when 30 of those sectors had posted gains and just three had notched losses.

However, it was a far cry from the May 12 week, when 20 of the sectors had ended in negative territory, 11 were positive two others showed neither a gain nor a loss on the week.

The week before that, ended May 5, had seen 17 of the sectors ending on the upside, barely nosing out the 16 which finished on the downside that week.

Among specific large-sized sectors during the May 26 week, coal mining was the top performer, while food manufacturing made the worst showing.

On a year-to-date basis, with 21 weeks of 2017 now in the books, lodging had the best cumulative showing for a third week in a row. Automotive services did the worst for the year to date for a second straight week.

Coal mining climbs

Among the specific large-sized sectors, coal mining, as noted, was the top finisher among the large-sized sectors last week, gaining 1.06%.

It was coal’s second consecutive week on the Top Five list of the best-performing large-sized sectors, having also been there during the May 19 week with a 0.74% return.

Other sizable sectors showing strength last week included automotive services (up 0.96%), printing and publishing (up 0.52%), depository financial institutions (up 0.42%) and miscellaneous retailing (up 0.40%).

It was a strong comeback for automotive services, printing and publishing and miscellaneous retailing, all of which had been among the Bottom Five worst-performing key sectors the week before.

The autos grouping, in fact, had been among the Bottom Five for four straight weeks before last week, and had the single worst showing during the May 19 week, when it lost 0.72%.

Printing and publishing and miscellaneous retailing were also among the underachievers in that May 19 week with a meager 0.05% gain and an 0.13% loss, respectively, although the retailers have now been among the best finishers in two weeks out of the last three, having made it during the March 12 week with a 0.21% return.

After having not been among the leaders in the May 19 week, the depository financials have now been among the Top Five in three weeks out of the last four, including the May 12 week, when they rose by 0.29%.

Food manufacturing falters

On the downside, food manufacturing, as noted, was last week’s worst performer among the major sectors, losing 0.33%.

It was the sector’s second straight week among the Bottom Five, having also been there during the May 19 week with a weak 0.07% gain.

Paper manufacturing (down 0.06%) was the only other large-sized sector finishing in the red last week.

The Bottom Five was therefore filled out by sectors posting much smaller gains than all of the others – energy exploration and production (up 0.01%), oil and natural gas extraction (up 0.02%) and midstream energy services (up 0.09%).

Both the energy E&P and the oil and gas extraction sectors tumbled to the bottom after having been among the Top Five finishers during the May 19 week, with gains of 0.89% for E&P – the best of any key sector that week – and 0.71% for oil and gas extraction.

However, that May 19 week was a rare upside blip for both sectors; both had been among the Bottom Five for four straight weeks before that, and have thus now been among the big losers in five weeks out of the last six.

Lodging best on the year

On a year-to-date basis, lodging remains the top 2017 performer so far with an 8.50% return, its third straight week at the top.

Health care (up 8.34%) has been in the runner-up spot also for three straight weeks.

Third-best chemical manufacturing (up 7.00%), fourth-best oilfield services (up 6.77%) and fifth-strongest depository financials (up 5.82%) have now occupied those positions for two straight weeks.

Auto services worst on year

Automotive services – mostly vehicle-rental companies – despite its strong weekly showing as noted, was the worst large sector on a cumulative basis for a second straight week, returning just 0.01% on the year.

Miscellaneous retailing (up 0.94% on the year) was second-worst for a second successive week.

Energy E&P (up 2.26%) was third-worst, oil and gas extraction (up 2.60%) was fourth-worst, and food stores (up 3.03%) was fifth-worst for the year to date.

© 2015 Prospect News.
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