Bear Stearns index falls 0.12% in most recent week, dragged down by Adelphia

New York, April 5 - Adelphia Communications Corp.'s troubles helped pull down the Bear Stearns High Yield index in the most recent week, ending five consecutive weeks of gains.

For the seven days to April 4, the index showed a decline of 0.12%, reducing the year-to-date return to 2.04%.

Contributing to the decline was the fall in Adelphia's bond prices after investors were spooked by the cable company's revelation of $2.3 billion of off-balance sheet debt.

Adelphia is the index's fifth largest issuer and makes up 25% of North American cable, the index's biggest industry sub-sector, and 10% of the broader media sector, Bear Stearns analyst Mike Taylor told Prospect News.

Without Adelphia's problems, he added, the index would "probably" not have declined.

"There's not many that have such a great impact," he added, noting the company's substantial outstanding debt.

Thanks to Adelphia, North American cable, which makes up 7.09% of the whole index, lost 2.64% in the seven-day period. It also dragged down the media group, making it the worst performer among the 11 broad industry sectors. Media, which lost 1.00% in the most recent week, makes up 17.02% of the total index.

The index's negative return also didn't stop its yield to worst from declining 12 basis points to 11.77% from 11.89% the week before. The spread to worst, meanwhile, held steady at 709 basis points.

Overall the index included 1,402 issues with a market value of $311.296 billion, both down from 1,416 issues with a market value of $315.888 billion the week before.

Although the overall index declined, seven of the 11 component sectors making up the index rose and four fell.

The top performer was finance, which added 0.71% in the week for a year-to-date return of 4.73%. The week before, capital goods-manufacturing had led, but in the most recent week it gave up some of the gains, falling 0.14%.

On a year-to-date basis the top performing sector is transportation despite a 0.85% loss in the week to April 4. The group's return so far in 2002 is 9.95%.

In the other direction, telecommunications held on to its position as high-yield's worst performer. With a loss of 0.37% in the most recent week, the sector is now down 14.89% for the year through April 4.

Among the narrow sub-sectors into which Bear Stearns divides the broad industry groups, metals turned in the best return in the most recent week, adding 1.36% although it is still down 5.34% year to date.

On a year-to-date basis, the top sub-sector continues to be satellites, which added 0.67% in the most recent week, taking the return through April 4 to 18.34%. Bear Stearns' Taylor noted that satellites - like motion picture exhibitors - has seen its ranks thinned through the Chapter 11 filing of many issuers. It now includes just six issues, among them fallen angel PanAmSat Corp. Fallen angels can be good performers, once investment-grade accounts have finished unloading their holdings immediately after the downgrade to junk, Taylor noted.

Similarly, long distance held on to its place at the bottom, with a further 1.35% drop in the most recent week for a year-to-date return of negative 34.52%.

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