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B of A Merrill Runs Deals Neck And Neck With Citi

Bank of America Merrill Lynch is closing in on Citi in the race to be the number one municipal bond underwriter for 2009.

Bank of America Merrill was the top underwriter in the third quarter, managing $14.52 billion in deals for a 16.1% market share, according to Thomson Reuters.

That beats out Citi, which managed $11.23 billion for a 12.4% market share. Citi retains the top spot year-to-date, but the race is getting closer.

Citi has underwritten $42.71 billion in munis through September, compared with Bank of America Merrill Lynch’s $41.48 billion.

Citi’s lead at the end of the ­second quarter was more than $4.5 billion in underwritten par value. The gap has shrunk to about $1.2 billion.

See the Rankings here.

Thomson Reuters data suggest Bank of America Merrill Lynch’s late push is attributable mostly to Build America Bonds.

One of the categories Thomson Reuters publishes underwriting statistics in is bonds issued under federal stimulus programs, the great majority of the face value of which is BABs.

Enacted under the American Recovery and Reinvestment Act in February, the program enables municipalities to forego the traditional tax exemption on their debt and instead sell taxable bonds and collect a federal subsidy equal to 35% of the interest costs.

The program has been a smash, with issuers selling $34.42 billion of BABs since their debut in April.

Bank of America Merrill Lynch was the clear leader in this category in the third quarter. The Charlotte, N.C.-based bank underwrote $4.63 billion in stimulus program bond underwritings for a 22.8% market share.

That was more than double Citi’s market share, at less than 10%.

Dominating BABs has lifted Bank of America Merrill Lynch’s underwritten par value in part because BABs tend to be bigger than most other types of muni issues.

An illustrative statistic: the average municipal issue so far this year has $34.7 million in face value.The average size of a bond issued under a federal stimulus program is $74.4 million in face value.

JPMorgan is on track to retain its number three spot from last year. The New York-based bank has underwritten $33.65 billion this year for an 11.7% market share. The company also ranked third in the latest quarter, with a 12.3% market share.

Morgan Stanley is fourth with a 9.5% share so far this year.

Goldman Sachs and Barclays Capital are set to hold on to their number four and number five rankings, with a 6.8% and 6.4% market share, respectively.

Because of an idiosyncrasy in how Thomson Reuters computes winners of previous years, Bank of America Merrill Lynch and Citi both have legitimate claims to being last year’s winner.

Citi claimed the top spot last year, but comparisons are tricky.

Merrill Lynch and Bank of America were separate companies at the time. Merrill ranked second and B of A ranked seventh.

Thomson Reuters retroactively combines past underwriting results for firms that merge. Bank of America and Merrill Lynch combined to write more business than Citi. Bank of America Merrill Lynch is now listed as the top underwriter for 2008.

Public Financial Management remains on track to finish first among financial advisers again this year.

The Philadelphia-based financial adviser has worked on $38.12 billion in deals for a 17.4% share.

Public Resources Advisory Group is second with a 12.5% share. First Southwest is third was an 8.1% share.

Public Resources Advisory is dominating the stimulus program bonds category with a 21.9% market share. PFM trails with a 14.7% share.

Robert W. Baird has catapulted to the top spot among senior managers of small issues, with $1.29 billion underwritten and a 7.6% market share. The company displaces Morgan Keegan & Co., which has dropped out of the number one spot to number three, with a 6.1% market share.

RBC Capital Markets remains in second, with a 6.3% share.

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