High yield players were awfully glad to turn the calendar on a dismal September, which produced the worst monthly performance for the asset class since June 2013, according to bond guru Martin Fridson.
And there's a new poster child for the return-challenged market – for now, anyway. Telecoms replaced the long-beleaguered energy sector as the worst-performing industry in September. Fridson, writing for LCD News:
Although Energy and Metals & Mining, August’s two worst performers, remained near the bottom of the peer group [in September], their returns were not as low as in August. Telecommunications plunged from #7 in August, at –0.45%, to #15 out of 15 in September, at –5.34%.
The most dramatic event in that industry was a plunge in Sprint bonds following a Moody’s downgrading from B2 to Caa1. That large issuer’s decline did not distort the overall performance of the telecom sector, however. Bonds of seven other Telecom issuers posted total returns of –5% or less in September, with the Wireline, Wireless, and Satellite subindustries all represented among those severely underperforming companies.
The relative respite for energy-related issuers could be short-lived however. Fridson goes on to note that S&P recently took an axe to energy ratings, boding ill for that category, obviously.
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