Advantage Data: Junk sectors broadly lower last week in second straight big loss

By Paul Deckelman

New York, Feb. 12 – For a second consecutive week, the junk bond market fell badly last week (ended Feb. 9), according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It was the third such downturn in the last four weeks.

It was the fourth week in the last 10, dating back to the week ended Dec. 8, 2017, that more sectors had shown losses than gains, with the winners outnumbering the losers in the other six of those weeks.

The sectors had also finished mostly negative during the week ended Jan. 19, and during the week ended Dec. 22, which had snapped a five-week winning streak dating back to mid-November.

Last week was the third week in the new 2018 calendar year in which the losers outnumbered the gainers, versus three weeks on the upside – the weeks ended Jan. 26, Jan. 12 and Jan. 5.

For a second week in a row, 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 red last week, with none of them having finished in the black.

It thus matched the clean sweep seen during the previous week, ended Feb. 2.

That was a stark contrast to the Jan. 26 week, when 30 of those sectors had shown gains and only three had posted losses.

That, in turn, was a solid comeback from the Jan. 19 week, when 22 of the sectors had ended the week on the downside, just 10 had finished on the upside and one sector – amusement and recreation services – had shown neither a gain nor a loss on the week.

Among specific large-sized sectors during the week ended Feb. 9, oilfield services suffered the biggest loss, while non-depository credit institutions was the best performer, relatively speaking, with the smallest weekly deficit.

On a year-to-date basis six weeks into the new year, coal mining took over the top spot, while paper manufacturing was at the bottom of the pile for a sixth straight week.

Oilfield services plunge

Amid a rough week for energy, with crude oil prices showing sizable declines, oilfield services, as noted, was the worst performer last week among the large-sized sectors, nosediving by 2.23%.

It was the sector’s second consecutive week among the Bottom Five worst-performing large-sized sectors, having also been there during the Feb. 2 week with a 0.97% decline.

However, before that, oilfield services had been among the Top Five best-performing large-sized sectors in two weeks out of the previous three, including the Jan. 26 week, when in fact it had beaten all of the other key sectors with a 1.09% climb that week.

Paper manufacturing (down 2.22%) finished almost as badly as oilfield services last week, and has now been among the Bottom Five in two weeks out of the last three, including the Jan. 26 week, when it had eased by 0.03%, and on a longer-term basis, has been among those underachievers in five weeks out of the last six. That includes the Jan. 5 week, when it was the single-worst large-sized finisher, with a 0.30% loss that week.

Like oilfield services, all of the other sectors in last week’s Bottom Five were energy-oriented – oil and natural gas extraction (down 2.05%), energy exploration and production (down 1.90%) and petroleum refining (down 1.44%).

It was the second consecutive week among the Bottom Five for both oil and gas extraction and energy E&P; both had also been among the worst finishers in the Feb. 2 week with losses that week of 1.35% and 1.37%, respectively. That latter loss gave E&P the unwanted distinction of being the single worst large-sized finisher that week.

E&P has thus now also been among the Bottom Five in three weeks out of the last four, having also been there during the Jan. 19 week, when it lost 0.32%.

On the other hand, before its steep downturn of the last two weeks, oil and gas extraction had actually been among the Top Five elite finishers in four weeks out of the previous five, including the Jan. 26 week, when it finished up by 0.62%.

Week’s outperformers

With all 33 of the biggest sectors having shown losses last week, as noted, there was no upside as such.

Instead, the Top Five was composed of the sectors showing the smallest losses among their peers, led by non-depository credit institutions, which lost 0.39% on the week.

Other sectors showing relative strength in a decidedly negative week by posting only somewhat modest losses last week included non-computer electrical and electronics manufacturing (down 0.54%), real estate (down 0.57%), and two sectors each posting a 0.58% loss last week – food manufacturing and precision instrument manufacturing.

It was the second consecutive week among the Top Five for precision instruments, which had also made it during the Feb. 2 week with a relatively modest 0.24% setback.

Coal mining best, paper worst

On a year-to-date basis after six weeks’ time, coal mining and food stores continued to jockey for the top spot.

Last week, coal regained the status as top performer for the second time in the last three weeks, with a 2.51% return.

That pushed food stores down into the runner-up slot for the second time in three weeks with a 2.06% cumulative return; during the Feb. 2 week, the grocers had been on top for the second-time in the previous three weeks, alternating with coal.

They were followed by third-best printing and publishing (up 0.33% on the year so far), fourth-best health care (down 0.18%) and fifth-best miscellaneous retailing (down 0.23%). It was the retailers’ second time in that Number-Five slot in the past three weeks.

On the downside, paper manufacturing (down 3.96%) was the year-to-date cellar-dweller for a sixth straight week.

Automotive services (down 1.88%) was second-worst on the year for a second week in a row.

Telecommunications (down 1.41%) was third-worst on the year, petroleum refining (down 1.24%) was fourth-worst year-to-date, and business services (down 1.23%) was the fifth-worst sector on the year so far.

© 2015 Prospect News.
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