Advantage Data: Financials take a beating, lodging, trucking among week's worst junk sectors

By Paul Deckelman

New York, Feb. 23 - In a week which saw bonds performing lower across most high-yield sectors, financial areas such as banking, insurance and real estate continued to suffer, as did lodging, media-related companies and truck transportation, according to statistics supplied to Prospect News by Advantage Data Inc. Sectors finishing on the upside, on the other hand, were few and far between, although mining industry credits showed relatively good gains.

Of the 68 broad industry sectors into which Boston-based Advantage Data divides its high-yield universe, 50 showed declines in the week ended Friday, versus 18 gains - a sharp reversal of the trend seen the week before, when 39 sectors finished in the black, against 29 which ended in the red.

Lodging, men's apparel among losers

Lodging remained the worst-performing broad industry sector with an 8.72% drop on top of the 9.66% plunge that the sector took the week before, ended Feb. 13.

Other broad industry sectors showing notable losses for the week included metals manufacturing, whose 7.82% loss included a 19.38% plunge in iron and steel foundries and a 38.25% nosedive in bonds issued by companies in the non-ferrous casting companies subsector.

The subsector showing the single largest loss on the week was men's and boys' apparel manufacturing, which plummeted 61.54% on the week, with miscellaneous apparel manufacturing down 33.61%, although the overall textile manufacturing sector was off by a relatively small 5.05%

Financials remained an area of concern, with the savings institutions subsector falling 10.39%, commercial banks off 5.40%, mortgage bankers down 9.08%, securities broker/dealer companies down 9.72%, real estate agents swooning by 11.04% and surety insurance providers down 8.02%. Fire, marine and casualty insurers lost 3.72%.

Other notable losing industry areas included media-related companies, with advertising sliding 10.80%, radio and TV station owners 9.93% lower, and miscellaneous publishing down 19.81%. Retailing industry segments suffering included drug stores, off 10.62%, and women's accessory and specialty store operators, down 9.12%, and department stores, down 2.51%.

Other widely followed subsectors finishing lower on the week included automobile and parts manufacturing, down 1.48%, oil and gas production, down 2.59%, and residential construction, down 2.93%. Heavy construction lost 7.18%.

Mining names lead upsiders

On the upside, mining - which was also a gainer the previous week - was one of the few areas showing consistent strength. The non-metals mining broad sector returned 5.46%, paced by the sand and gravel subsector, which gained 7.42%, the best of any industry sub-group in the Advantage Data high-yield universe, and chemical and fertilizer minerals mining, which rose 1.76%.

The iron mining subsector was also strong, with a 6.49% return, although that did not prevent the overall metal mining sector from losing 0.44% on the week.

Outside of mining, commercial fishing did well, with a 4.56% return.

Among the retailers, a group mostly on the downside, women's clothing store companies bucked the trend by posting a stylish 1.78% return on the week, while grocery stores fattened up by 0.93%.

Fishing, pipelines best on year

On a year-to-date basis, commercial fishing, helped by its strong weekly performance, as noted, was the best-performing broad-market sector, returning 32.81% on the year, followed by energy pipelines, up 30.30%; miscellaneous manufacturing, up 19.01%, largely due to strong returns from companies making toys, sporting goods, jewelry and silverware; and insurance agents, up 16.53%.

Also strong year to date are producers of canned and frozen fruits and vegetables, up 29.04%; movie theaters, up 24.25%; deathcare companies, up 20.02%; agricultural chemical companies, up 20.39%; and - despite the subsector's big loss on the week, as noted - mortgage bankers, up 19.09%. However, the best year-to-date performance of any single sector or subsector still belongs to copper mining, which has zoomed by 162.44% since the start of the year. Iron mining, one of the week's few strong areas, as noted, was up 40.52% on the year.

Year's worst sectors

On the downside, lodging, again hurt by its sharp weekly decline, remains the worst-performing broad market sector on the year, with a 20.73% cumulative loss. Subsectors showing big 2009 losses so far include foreign-based banks, down 30.06%; residential builders, down 26.72%; and closely related, makers of household furniture, down 36.31%. Automotive manufacturing is showing a 19.49% year-to-date loss, while dairy products producers have lost 25.73%.

Areas hurt by big losses in the most recent week, as noted, include men's and boys' apparel makers, now down 75.87% on the year, and miscellaneous apparel makers, down 43.26%; non-ferrous metal castings are down 45.76%, while advertising is off 23.76%. Metal forging and stampings, the biggest loser the week before, remains down 69.47% on the year, according to the Advantage Data statistics.

As of this past Friday, the overall domestic high-yield market, as measured by the widely followed Merrill Lynch High Yield Master II Index, was down 1.91% over the previous week, to stand at a year-to-date return of 3.99%.

The average Master II price of a high-yield issue stood at 62.68 as of Friday, with a spread of 1,653 basis points over comparable Treasuries and a yield to worst of 18.63% - versus a price of 64.10, a spread of 1,599 bps and a yield to worst of 18.11% the week before.

The index opened 2009 with an average price of 61.42, a spread of 1,758 bps, and a yield to worst of 19.43%.

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