Advantage Data: Junk sectors mostly higher last week, snapping three-week streak of big losses

By Paul Deckelman

New York, Feb. 27 – The junk bond market decisively broke out of its recent rut last week (ended Feb. 23), according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

The gain snapped a three-week streak of big losses, part of a broader pattern of four such downturns over five weeks.

Last week was the fifth week in the last 10, dating back to the week ended Dec. 22, in which more sectors had shown gains than losses, with the losers outnumbering the winners in the other five of those weeks.

Last week was the fourth week in the new 2018 calendar year in which the gainers outnumbered the losers, with losing sectors predominating in the other four weeks since the start of the year.

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 24 of those sectors ending in the black last week, with nine sectors having finished in the red.

That was a clear comeback from the previous week, ended Feb. 16, during which 31 of those key sectors had posted losses, versus only two sectors showing gains that week.

And in the two weeks before that, ended Feb. 2 and Feb. 9, all 33 sectors were in negative territory, with no sectors on the plus side of the ledger.

During the week ended Jan. 26 – the most recent previous week on the upside – 30 of those sizable sectors had put up gains, while just three of them had recorded losses.

Among specific large-sized sectors during the week ended Feb. 23, the recently embattled paper manufacturing sector roared back to put up the biggest gain, while food stores had the biggest loss.

But despite that strong showing on the week, the papermakers remained at the bottom of the year-to-date returns pile for an eighth straight week, while miscellaneous retailing did the best on a cumulative basis.

Papermakers move to first

As noted, the paper manufacturing sector had the strongest performance of any large-sized grouping last week, soaring by 4.43% on the week, bouncing back from its badly oversold status the week before.

It thus accomplished the notable feat of having gone from worst to first; during the Feb. 16 week, it had plunged 2.72%, the most of any big sector, and its second straight week among the Bottom Five worst-performing key sectors. It had also been among those underachievers during the Feb. 9 week with a 2.22% plunge.

Also showing strength in the latest week were automotive services (up 0.67%), wholesale durable goods distributors (up 0.66%), miscellaneous retailing (up 0.60%) and lodging (up 0.54%).

It was the second week in a row the retailers had been among the Top Five best-performing large-sized sectors, having also made it there during the Feb. 16 week with a 0.20% gain.

Food stores falter

On the downside, food stores lost 1.30% last week, the most of any major sector.

Also showing notable losses on the week were chemical manufacturing (down 0.28%), food manufacturing (down 0.23%) and the real estate and telecommunications sectors, both of which dropped by 0.13%.

It was a comedown for the chemical grouping, which had been among the previous week’s Top Five, managing to eke out a 0.03% gain during that overwhelmingly negative Feb. 16 week.

Year-to-date standouts

On a year-to-date basis after eight weeks’ time, miscellaneous retailing – also one of the week’s better performers, as noted – had the best cumulative return, at 2.98%, moving up to the top spot after having only been third-best the week before.

It was followed by second-best business services and coal mining (both up 1.80%), health care (up 1.79%), and primary metals processing (up 1.30%).

Coal mining thus was the runner-up for two straight weeks and for the sixth in eight weeks.

Number-Three health care had been fourth-best for three straight weeks before that.

On the downside, paper manufacturing – despite having been the week’s best performer, as noted – was the year-to-date cellar-dweller for an eighth consecutive week, showing a 4.31% cumulative loss.

Food manufacturing (down 1.11%) fell to second-worst on the year, followed by third-worst depository financial institutions (down 0.96%), and fourth-worst real estate and automotive services (both down by 0.89%).

© 2015 Prospect News.
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