Advantage Data: Junk sectors continued rebound from recent loss last week with second straight gain

By Paul Deckelman

New York, Aug. 28 – The junk bond market remained on the rebound last week, ended Aug. 25, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It posted its second consecutive upturn after having seen a decisive loss during the week ended Aug. 11, which had been the first loss the sectors had seen since the week ended July 7, snapping a four-week winning streak.

Last week marked the seventh positive week for the sectors out of the last 10 weeks, dating back to the week ended June 23, versus three negative weeks during that stretch.

And for the year to date, a majority of the sectors have finished on the plus side in 27 weeks so far, while losses have dominated in seven 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 an improvement from the previous week, ended Aug. 18, when 18 of those key sectors had shown gains, 14 had posted losses and one other sector ended the week unchanged, showing neither a gain nor a loss.

In contrast, the Aug. 11 week saw fully 31 of the large-sized sectors in retreat, versus only two which had managed to eke out tiny advances.

Among specific large-sized sectors during the week ended Aug. 25, metals mining led all sectors, while coal mining suffered the worst loss for a second week in a row.

On a year-to-date basis, with 34 weeks of 2017 now in the books, lodging held the top spot on a cumulative basis for a fifth straight week, while oil and natural gas extraction was at the absolute bottom of the pile for a second successive week.

Metals mining moves up

The metals mining sector was the top finisher among the large-sized sectors last week, gaining 0.80% on the week.

It was the miners’ second consecutive week among the Top Five best-performing large-sized sectors, having also been there during the Aug. 18 week with a 0.52% gain.

Other key sectors showing strength last week included the lodging and primary metals processing sectors, both of which gained 0.44% on the week, plus health care (up 0.41%) and chemical manufacturing (up 0.37%).

Coal carnage continues

On the downside, coal mining plunged by 1.94%, its second straight week of posting the biggest loss of any large-sized sector.

Coal had also been in a hole during the Aug. 18 week, when it swooned by 0.99%.

The sector was led lower by the bonds of Murray Energy Corp., which plunged by nearly 7 points at mid-week on news reports indicating that the federal Energy Department would not issue an emergency order to keep coal-fired power plants at one of its key customers, the troubled First Energy Source, open and running as the latter company battles financial problems.

Other major sectors posting notable losses included food stores (down 0.78%), miscellaneous retailing (down 0.13%), oil and natural gas extraction (down 0.09%) and building construction (down 0.04%).

After a week-long hiatus following five straight weeks among the Bottom Five worst-performing large-sized sectors, the food stores have now been among the underachievers in six weeks out of the last seven and in eight weeks out of the last 11, dating back to mid-June, including several weeks in which the supermarket operators were the single-worst-performing grouping.

They were battered anew this week by the news that retailing giant Amazon.com – which is scheduled to close this week on its previously announced purchase of upscale specialty grocer Whole Foods Markets – will cut prices on a wide variety of products on Whole Foods’ shelves – raising the specter of a costly and destructive price war with a deep-pocketed opponent in what is already a low-margin business due to the entry into the grocery business of another retailing behemoth in recent years, Wal-Mart.

It was the second week in a row that the miscellaneous retailing sector has been among the Bottom Five, having also had that dubious honor during the Aug. 18 week, with a 0.18% loss.

And it was the fourth week in a row there for oil and gas extractions, having also lost 0.17% during the Aug. 18 week, 1.43% during the Aug. 11 week and 0.23% during the week ended Aug. 4.

Lodging stays on top for year

On a year-to-date basis, the lodging sector was the best performer for a fifth straight week and for its ninth week out of the last 10, with a cumulative gain of 13.03% last week.

Chemical manufacturing (up 9.11%), was in the runner-up slot for a third straight week and a fourth week out of the last five.

Those leaders were followed by third-best health care (up 8.96%), fourth-best depository financial institutions (up 7.97%) and fifth-best building construction (up 7.65%).

Oil and gas extraction worst

On the downside, oil and natural gas extraction was at the bottom of the year-to-date rankings for a second consecutive week with a 1.22% cumulative loss.

It was followed by second-worst food stores (down 1.08%), third-worst energy exploration and production (down 0.68%), fourth-worst coal mining (up 0.47%) – the week’s worst finisher, as noted – and fifth-worst miscellaneous retailing (up 0.93%).

© 2015 Prospect News.
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