Advantage Data: Junk sectors see second straight gain, rebounding from recent loss

By Paul Deckelman

New York, July 24 – The junk bond market was stronger for a second consecutive week last week, ended July 21, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It thus continued to rebound from its most recent loss, which had been seen in the week ended July 7.

The past few weeks have been choppy, with gains and setbacks alternating ever since a loss during the week ended June 23, which had snapped a five-week winning streak.

Last week marked the eighth winning week for the sectors out of the last 10 weeks, dating back to the week ended May 19, versus two negative weeks during that stretch.

For the year to date, a majority of the sectors have finished on the plus side in 23 weeks so far, while negative results have dominated in six weeks to date.

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 sectors ending in the black last week, with none finishing in the red.

That represented a strengthening from the breakdown seen in the previous week, ended July 14, when 31 of those key sectors had shown gains and only two of them had posted losses.

Among specific large-sized sectors during the July 21 week, chemical manufacturing and oilfield services tied for top honors. With no sectors actually showing losses, amusement and recreational services had the smallest gain on the week.

On a year-to-date basis, with 29 weeks of 2017 now in the books, health care took over as the best cumulative performer after four straight weeks at the top for lodging, while oil and natural gas extraction did the worst.

Chemicals, oil on top

After three straight weeks during which automotive services, consisting largely of vehicle-rental companies, had been the top finisher among the large-sized sectors, chemical manufacturing and oilfield services moved into the passing lane and took over that top spot, each returning 1.18% on the week. The autos grouping was meanwhile not among any of the best performers last week.

Other large-sized sectors showing strength in the latest week included oil and gas extraction (up 0.93%), health care (up 0.91%) and energy exploration and production (up 0.90%).

It was the second week in a row among the Top Five best-performing large-sized sectors for both oil and gas extraction and energy E&P, which were also there during the July 14 week, when they finished with gains of 0.96% and 1.05%, respectively.

Both of those volatile energy sectors have now also made the Top Five in three weeks out of the last four, with oil and gas extraction having posted a 1.29% gain and E&P a 1.36% advance during the week ended June 30.

Amusement has smallest gain

There was no downside as such last week for the large-sized sectors, with all of them having finished in the black, as noted.

The week’s Bottom Five list of the worst-performing key sectors was merely filled out by those industry groupings having much smaller returns than everybody else.

Chief among these was amusement and recreational services (up 0.19%), followed by food stores (up 0.25%), non-computer electronics and electrical equipment manufacturing (up 0.27%) and the real estate sector and the holding companies and other investment offices sector, both of which gained 0.28% last week.

It was the second straight week among the underperformers for both food stores and the electronics manufacturers, both of whom had posted losses in the July 14 week of 0.05% and 0.02%, respectively.

The grocers’ grouping, in fact, had been the single worst performer among the sizable sectors that week, and has now been among the Bottom Five in four weeks out of the last six, also having that dubious honor with losses of 2.13% during the week ended June 23 and 1.53% during the week ended June 16.

Health care tops for year

The health care sector – one of the week’s top finishers, as noted – also took over the top ranking on a year-to-date basis last week, returning 10.45%, thus switching places with the previous top performer, lodging, which with fell into the runner-up spot with a 10.32% return.

Lodging and health care had previously finished 1-2 over four straight weeks, although health care had been the top cumulative performer and lodging second-best over three consecutive weeks before that.

Chemical manufacturing, the week’s co-leader, as noted, stayed on as third-best on the year (up 9.71%) for a fifth week in a row.

Depository financial institutions (up 7.53%) was fourth-best for a second straight week and a third week in the last four, while amusement and recreational services – despite its relatively meager showing on the week – held on for a second consecutive week as fifth-best on the year with a 7.38% cumulative return.

Energy sectors lag for year

On the downside, oil and gas extraction and energy exploration and production – despite their strong performances on the week, as noted – remained at the bottom of the year-to-date rankings.

The two sectors have been trading places back and forth in a race to the bottom over the last few weeks, with oil and gas extraction now the worst cumulative performer, with a 0.36% return and E&P second-worst with a 0.87% return; both sectors have now been in those respective positions in two weeks out of the last three.

Away from the energy sphere, food stores (up 1.28%), one of the week’s worst finishers, fell two slots to third-worst on the year, after having previously only been the fifth-worst over two weeks in a row and four weeks out of five.

That gave a relative boost of sorts to miscellaneous retailing (up 1.69%), which was bumped up to just fourth-worst on the year, after having been third-worst for four straight weeks.

Non-computer electronics manufacturing (up 3.45%) was moved up to just fifth worst on the year after having been fourth-worst for two straight weeks.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.