Bear Stearns High Yield Index gains 0.07% in week to Sept. 15, now up 2.49% year to date

By Paul A. Harris

St. Louis, Sept. 16 - The Bear Stearns High Yield Index gained 0.07% during the most recent week ended Sept. 15, lifting the year-to-date return to 2.49%.

The gain follows the previous week's 0.05% loss.

The Bear Stearns index yield-to-worst spread tightened by 13 basis points to 367 bps.

The index has now reported gains in 46 of the past 66 weeks. Thus far in 2005 the index has posted 22 positive weekly returns versus 15 negative ones.

Six of the 11 industry sectors that comprise the index saw gains for the week to Sept. 15.

Bear Stearns high-yield strategist Mike Taylor wrote in a Friday e-mail message that excluding automotive names such Ford Motor Co., General Motors Corp. and General Motors Acceptance Corp., in addition to their suppliers, "the average return for the week was actually flat, meaning that prices were lower."

Taylor added that the Delta Airlines Inc. and Northwest Airlines bankruptcies, although expected, weighed on prices, as did rising Treasury yields.

"I believe the visible forward calendar for the next few weeks is still relatively full with LBO deals that don't even include some of the larger ones expected later this year in the retail, cable, and satellite sectors," Taylor added.

"So I think, with spreads still relatively tight, and the Fed not indicating a change of policy for the time being, there should be pressure on spread product.

"The direction still depends on the strength of the economy and inflationary pressures."

Taylor went on to point out that the media sector and its North American cable component were the outperformers for the week.

The media sector gained 0.41% on the week to end with a 2.58% year-to-date return. Its North American cable sub-sector led all others in the index by posting a 1.53% gain, increasing its year-to-date return to 2.51%.

Once again leading all underperformers was the transportation sector, which fell back 2.43% for the week, leaving its year-to-date return at negative 17.40%. Trailing the Delta and Northwest bankruptcies the transportation sector's ailing airline component dropped 12.75% on the week, its year-to-date return ending the period at negative 56.46%.

The telecommunication sector remained the outperformer on a year-to-date basis, ending the week with its 2005 gains at 5.43%. However the telecommunications sector gave up 0.02% on the week to Sept. 15. Telecommunication's cellular component also remained the year-to-date outperformer among the index sub-sectors at 13.81%, having gained 0.16% on the week.

The Bear Stearns High Yield Index yield to worst tightened by seven bps on the week to 7.72%.

The index ended the week with a market value of $590.73 billion, up slightly from the previous week's $590.56 billion. The number of issues declined by six to 1,755 issues.

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