The paucity of issuance of the first quarter allowed for some shake-up in the often frozen underwriter rankings.
Total municipal bond issuance totaled $47 billion from January to March, compared to $104 billion in the same period one year ago, according to Thomson Reuters.
Bank of America Merrill Lynch placed first in full-year 2010 and continues in the top spot this year, serving as senior manager on 59 deals totaling $6 billion in the quarter.
That’s well below the $14.29 billion it completed in first-quarter 2010, but was enough to absorb 12.9% of all deals.
JPMorgan moved up a spot to place second, leading 61 deals worth $5.3 billion.
Jeffrey Bosland, JPMorgan’s head of public finance, told The Bond Buyer’s National Municipal Bond Summit in Miami last week that his team put greater focus on competitive underwriting to make up for the light negotiated calendar.
The strategy worked: the bank easily placed first among competitive issues, winning 25.2% of all deals. Last year it was third.
Negotiated deals made up $34.2 billion of the $47 billion issued in the first quarter, but JPMorgan’s underwriting business was 61% competitive. It won 37 competitive issues totaling $3.2 billion ¯more than 40% of the $7.54 billion it completed in the previous 12 months, which was a record year for volume.
Brian Tournier, director of credit analysis at Stern Brothers & Co., said competitive deals are attractive to underwriters because of where they can be priced.
Negotiated issues plummeted 61% to $34.1 billion from the first quarter of 2010 to the first quarter of 2011, while competitive issues fell a moderate 26% to $12.8 billion.
“The competitive market is overwhelmingly represented by high-grade GO and essential-purpose revenue bonds — exactly the kinds of credits that have the best acceptance by the broad market,” Tournier said.
Yet Morgan Stanley opted for the opposite strategy of JPMorgan and it too moved up a spot to be the third-ranked underwriter.
It was the top negotiated manager with a 12.1% market share from 25 issues worth $4.1 billion. Its eight competitive bids totaled $197.3 million, representing less than 5% of its volume but good enough to place 10th.
Goldman, Sachs & Co. continued to be known for clearing big deals, despite the dearth of them this calendar year. Goldman led 19 issues totaling $3 billion, placing it fifth overall versus its sixth spot in 2010. Its average deal size was $160 million.
That compares with an average deal size of $23.2 million for RBC Capital Markets, which led the most offerings in the quarter. It placed eighth by volume, one spot behind its 2010 ranking.
Siebert Brandford Shank & Co., which became the first minority-owned firm to break into the top 10 last year, is ranked 15th so far this year.
But Chicago-based Loop Capital Markets, another minority-owned firm, jumped seven spots to place ninth in the quarter. It was senior manager on just three deals, but one was the $3.7 billion pension notes deal for Illinois.
“Volume was low, but we are seeing that clients are planning to be more active in the second and third quarters as budget issues become resolved,” said Alexander Rorke, Loop’s head of public finance.
Among financial advisers, nobody will be surprised to see that Public Financial Management Inc. placed first with a 15.1% market share. It worked on 119 issues worth $5 billion in the quarter, down from $13.8 billion in the same period last year.
Public Resources Advisory Group retained the second spot with $3.9 billion of deals. Peralta Garcia Solutions took third place despite working on just two deals. Like Loop, it got a major boost from working on the Illinois notes issue.
