Sell Side

Turmoil Tweaks Rankings

As dislocations shook the muni market, they also brought turbulence to the first-quarter league tables.

Click to see first-quarter league tables.

Firms like Merrill Lynch & Co. and Bear, Stearns & Co. underwrote less than half the business they did in the first quarter last year, while Lehman Brothers and Robert W. Baird & Co. used the turmoil to sprint up the rankings.

In total underwriting, Lehman moved into second place from sixth in last year's first quarter, managing 44 deals for a total of $8.4 billion in the 2008 period, according to preliminary data from Thomson Financial.

Citi was the muni market's busiest underwriter in the muni market, having lead managed 89 deals worth a combined $13.5 billion in the first quarter, while UBS Securities LLC came in third, inking 89 deals worth a combined $7.6 billion. For Citi, the activity was down almost 7% from the first quarter of 2007's record-setting volume, despite increasing its market share to 16.5%, up from 13.6% in last year's first quarter.

The increase in the quarter for Lehman was more than $1.5 billion over last year's total, based on the investment bank's involvement in a number of this year's largest deals, including multibillion-dollar issues from the North Texas Tollway Authority, California, and New York's Triborough Bridge and Tunnel Authority. Deal size for the firm averaged $190.1 million for each issue in the first quarter, compared to Citi's average of $151.5 million, and UBS' average of $84.9 million.

The market was not without its victims, as Merrill Lynch dropped to fourth place this year from first place in the first quarter of 2007, underwriting just 64 deals for a total of $7.4 billion. That is down nearly 53% from last year's pace of 98 deals and $15.6 billion of volume.

Bear Stearns also lost ground, falling from third in the first quarter last year to seventh this year. In the first three months of this year, Bear worked on just 18 deals worth $3.7 billion, compared to last year's first-quarter totals of 24 deals and $9.8 billion of volume. Bear's fall culminated with its sale in March to JPMorgan Chase, after a week in which the firm staggered under the weight of increased margin and liquidity calls on its balance sheet.

In competitive deals, Merrill continued to lead despite its overall drop, working on 24 issues for a total of $3.8 billion. In doing so, it increased its market share in competitive deals to 24.2% from 21% in 2007's first quarter, and further carved a noticeable niche for the firm. Merrill was followed by Citi, which lost more than half of its market share in competitive underwriting, dropping to 9% from an 18.2% share in last year's first quarter. UBS and Robert W. Baird were third and fourth in the competitive underwriting rankings, respectively.

Robert W. Baird moved into fourth place on the strength of 43 deals worth a combined $920.8 million. The firm improved from 23d place in the first quarter last year, having worked on just 10 deals worth $80.5 million.

Morgan Keegan & Co. held onto the top spot as manager of deals worth $10 million or less, managing 63 issues worth a combined $398.6 million, and increased its market share to 7.6%, from 6.9% last year. RBC Capital Markets and Wachovia Securities LLC came in second and third, respectively, even with their ranks last year, while Robert W. Baird moved into fourth place from sixth last year.

Morgan Keegan also vaulted to the top of the charts for co-managers, taking the top place on 51 issues worth a combined $2.6 billion, after a 10th-place ranking in last year's first quarter.

Among financial advisers, Public Financial Management Inc. moved into first place in all of the categories after being ranked within the top three last year.

Overall, PFM owned an 18% share of the advisory market, working on 179 issues worth a total of $10.7 billion. That was an improvement over the 151 deals worth $9.3 billion in last year's first quarter, when the firm held 12.7% of the market share while in third place.

"From our perspective, it demonstrates that in what is a really difficult market, our clients continue to have a lot of confidence in us to do what's best for them," said John White, chief executive officer for PFM. "We've been able to help them execute transactions despite all the difficulties that have beset the market over the first quarter of this year."

Overall, RBC Capital Markets moved into second place, on 42 deals worth a combined $5 billion, while Public Resources Advisory Group, ranked first last year, dropped more than half of its market share, to 6.7% from 14.3% in last year's first quarter, on just 19 deals worth $4 billion. First Southwest Co., the second-busiest financial adviser in last year's first quarter, fell to fourth this year after working on fewer than half the deals it did in the same period last year.

In negotiated deals, PFM worked on 88 issues worth $6.9 billion, while RBC Capital Markets worked on 29 deals worth $4.6 billion. PFM outstripped RBC in market share, 15.3% to 10.2%. PFM grabbed the lion's share of the competitive market as well, working on 91 deals worth $3.7 billion, for 26.8% of the market. PRAG came in second on competitive deals, for 6.9% of the market, on nine deals worth a combined $958.8 million.



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