Advantage Data: Junk sectors continued rebound last week with third straight gain after recent loss

By Paul Deckelman

New York, Sept. 5 – The junk bond market remained on the rebound last week, ended Sept. 1, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

It posted its third 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 eighth positive week for the sectors out of the last 10 weeks, dating back to the week ended June 30, versus just two negative weeks during that stretch.

And for the year to date, a majority of the sectors have finished on the plus side in 28 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 30 of those sectors ending in the black last week, with only three finishing in the red.

That represented an improvement from the previous week, ended Aug. 25, when 27 of those key sectors had shown gains and six had posted losses.

In contrast, the losing 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 Sept. 1, automotive services led all sectors, while coal mining suffered the worst loss for a third week in a row.

On a year-to-date basis, with 35 weeks of 2017 now in the books, lodging held the top spot on a cumulative basis for a sixth straight week, while food stores fell to the absolute bottom of the pile last week.

Auto services outperform

The automotive services sector, mostly consisting of vehicle-rental companies, was the top finisher among the large-sized sectors last week, gaining 1.29% during that seven-day period.

After a week-long hiatus away from the leaders, the autos grouping has now been among the Top Five best-performing large-sized sectors in three weeks out of the last four and in fact has led in all three of those weeks, including the week ended Aug. 18 and the week ended Aug. 11, when it posted returns of 0.57% and 0.07%, respectively. But the week before that, ended Aug. 4, saw the frequently volatile sector as the worst-performing industry grouping, with a 1.78% loss that week.

Other key sectors showing strength last week included primary metals processing (up 0.58%), petroleum refining (up 0.56%), metals mining (up 0.55%) and telecommunications (up 0.49%).

It was the second week among the top finishers for metals processing, which had also been there the week before with a 0.44% gain, and the third week among the elite for metals mining, which had been the best performer of all during the Aug. 25 week with a gain of 0.80%, and had also been among the best in the Aug. 18 week with a 0.52% rise.

Coal stays ice-cold

On the downside, coal mining plunged by 0.39%, its third straight week of posting the biggest loss of any large-sized sector.

Coal had also been in a hole during the Aug. 25 week, when it plunged by 1.94%, and during the Aug. 18 week, when it swooned by 0.99%, the worst among any key sector in both of those weeks.

Other major sectors posting notable losses last week included miscellaneous retailing (down 0.34%), food stores (down 0.10%), energy exploration and production (up 0.01%) and building construction (up 0.05%).

The food stores were among the Bottom Five worst-performing large-sized sectors for a second straight week, having also been there in the Aug. 25 week with an 0.78%, loss, and longer-term, have now been among the underachievers in seven weeks out of the last eight and in nine weeks out of the last 12, dating back to mid-June, including several weeks in which the supermarket operators were the single-worst-performing grouping.

Building construction was also among the big losers for a second consecutive week, having lost 0.04% in the week ended Aug. 25.

It meantime was the third week in a row that the miscellaneous retailing sector has been among the Bottom Five, having also had that dubious honor during the Aug. 25 week and the Aug. 18 week with losses of 0.13% and 0.18%, respectively.

And after a week-long hiatus, energy E&P was back among the Bottom Five for a third week in the last four, having also been there during the Aug. 18 week, when it lost 0.15%, and in the week ended Aug. 4, when the sector nosedived by 1.51%.

Lodging stays on top for year

On a year-to-date basis so far, the lodging sector was the best performer for a sixth straight week and for its 10th week out of the last 11, with a cumulative gain of 10.13% last week.

Chemical manufacturing (up 9.36%), was in the runner-up slot for a fourth straight week and a fifth week out of the last six.

Those leaders were followed by third-best health care (up 9.30%) and fourth-best depository financial institutions (up 8.37%), both in those positions for a second week in a row, and fifth-best amusement and recreational services (up 7.94%).

Food stores worst on year

On the downside, food stores, one of the week’s worst performers, as noted, also had the worst year-to-date showing last week, down 1.46%, after having been only second-worst the week before. But it has now been the worst cumulative performer in four weeks out of the last six.

It was followed by second-worst oil and natural gas extraction (down 1.22%), which had been down at the absolute bottom of the stack the previous two weeks.

Energy exploration and production (down 0.54%) was third-worst on the year, with miscellaneous retailing (down 0.08%) fourth-worst and coal mining – the week’s single worst finisher, as noted – fifth worst on the year, with a 0.59% gain.

© 2015 Prospect News.
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