Advantage Data: Junk sectors see third straight gain after recent loss

By Paul Deckelman

New York, July 31 – The junk bond market was stronger for a third consecutive week last week, ended July 28, 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 during the week ended July 7.

While the past three weeks have seen strength, the several weeks before that had 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 26, versus two negative weeks during that stretch.

For the year to date, a majority of the sectors have finished on the plus side in 24 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 60 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 27 of those sectors ending in the black last week, with six finishing in the red.

That represented something of a retreat from the enormously strong performance seen in the previous week, ended July 21, when all 33 of those key sectors had shown gains and none at all had posted losses. During the week ended July 14, 31 sectors ended on the upside, against just two on the downside.

The past three weeks’ results have stood in stark contrast to the July 7 week, when 27 of those larger sectors had ended in negative territory while just five sectors were on the plus side and one other sector had ended unchanged on the week, showing neither a gain nor a loss.

Among specific large-sized sectors during the July 28 week, metals mining had the best gain, while food stores suffered the worst loss.

On a year-to-date basis, with 30 weeks of 2017 now in the books, lodging regained in the top spot on a cumulative basis, ousting health care; during the July 21 week, health care had snapped lodging’s steak of four straight weeks at the top

Weekly big loser food stores was also the worst performer on a year-to-date basis last week.

Metals mining tops the week

Metals mining (up 0.92%) was the best performer last week among the large-sized sectors.

It has now been among the Top Five best-performing sectors in two weeks out of the last three, having also been there during the July 14 week, when the grouping had posted a gain of 0.76%.

Also showing strength last week were oilfield services (up 0.64%), primary metals processing (up 0.57%), food manufacturing (up 0. 51%) and two sectors each returning 0.45% on the week – amusement and recreational services and energy exploration and production.

Oilfield services has now been among the Top Five in two straight weeks, having also made it with a 1.18% gain during the July 21 week.

Energy E&P has now been among the Top Five over three straight weeks, having also been there during the weeks ended July 14 and July 21 with gains of 1.05% and 0.90%, respectively.

And it has been among the elite finishers in four weeks out of the last five, having also made the cut during the week ended June 30, with a 1.36% advance.

In contrast, amusement and recreational services had spent the July 21 week among the Bottom Five worst-performing key sectors, when it gained a sedate 0.19% – actually the smallest gain of any sizable sector that week.

Food stores falter

On the downside, food stores was the worst-performing large-sized sector last week, losing 1.03%.

It was the grocer’s third straight week among the Bottom Five, having also been there during the July 14 week with a 0.05% loss, the worst of any large sector, and the July 21 week, with a modest 0.25% gain, one of the smallest of any sector that week.

The food stores grouping has also now been in the Bottom Five in five week out of the last seven, having also notched big losses of 1.53% during the week ended June 16 and 2.13% during the week ended June 23.

Also among the week’s underachievers were health care (down 0.95%), chemical manufacturing (down 0.28%), holding companies and other investment offices (down 0.17%) and miscellaneous retailing (down 0.16%).

Health care and the chemical makers had both been among the Top Five names during the July 21 week, with gains of 0.91% and 1.18%, respectively; the chemical companies’ collective gain was the largest of any sector that week.

On the other hand, holding companies were part of the Bottom Five for a second straight week, having also been there with a paltry 0.28% gain during the July 21 week.

Lodging back on top for year

The lodging sector returned to its recently familiar place as best year-to-date performer among the major sectors with a 10.26% cumulative return last week, pushing out health care, which had temporarily displaced lodging during the July 21 week; the hoteliers had been the top cumulative performer over the four straight weeks before that.

Chemical manufacturing – despite its poor showing on the week, as noted – was in the year-to-date runner-up position with a 10.06% return on the year, moving up one notch in the rankings after having spent the five previous weeks as third-best among the big sectors.

That knocked health care (up 9.42%), the previous week’s year-to-date leader, down two notches, to just third-best.

Amusement and recreational services (up 8.01%), one of the better performers on the week, pushed up to fourth-best on the year after two straight weeks at Number-Five.

It switched places with depository financial institutions (up 7.72%), which fell one slot to fifth-best on the year after two consecutive weeks as fourth-best.

Food stores worst on year

On the downside, food stores – the week’s single-worst performer, as noted – also fell to the bottom of the year-to-date rankings with an anemic 0.32% gain on the year, after having been just third-worst in the July 21 week.

The grocers were followed by second-worst oil and natural gas extraction (up 0.45%), which had been the worst cumulative performer in the July 21 week for a second time in three weeks.

Miscellaneous retailing (up 1.45%) fell to third-worst on the year from just fourth-worst the previous week, but has now been third-worst in five weeks out of the last six.

Energy exploration and production (up 1.47%) improved, relatively speaking, to just fourth-worst on the year from second-worst before that, a slot it held in two out of the prior three weeks.

And automotive services (up 4.36%) fell to fifth-worst on the year, despite having not recently been among the underachievers.

© 2015 Prospect News.
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