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Orrick Soars to Three-year High in Bond Counsel Par

Orrick, Herrington and Sutcliffe LLP stretched its lead in the ranking of bond law firms in the first half of 2013, with over $18 billion in assignments by par value of deals, or almost 11 percent of the market. That’s the most since 2010, when the legal giant was counsel to $24 billion, or 12 percent of the market, according to Thomson Reuters data released Friday.

Quarterly Rankings

“We’ve highly diversified, both geographically and in the types of bond issues,” Roger Davis, chairman of the public finance department at Orrick, said in an interview. “We work on very small deals and very large deals. They range from the simplest general fund borrowing to highly complicated public private partnership transactions, of which we’re seeing an increasing number.”

The quarterly rankings also showed Assured Guaranty Municipal Corp. remained the leading bond insurer followed by Build America Mutual, which started to grab some market share in an industry that had been decimated by the 2008 financial crisis. US Bank NA topped the list of trustees.

Among law firms Hawkins Delafield & Wood LLP held the second spot for the fourth time in five years, even as the firm’s $7.9 billion in par fell short of its $12.5 billion at this time last year.

Trailing closely behind Hawkins was newly formed Norton Rose Fulbright, the result of a June 2013 merger between international firm Norton Rose and U.S.-based Fulbright and Jaworski LLP. The firm accounted for $7.8 billion in par, with 207 issues – more than any firm in the top five. McCarter & English LLP, at No. 10, was counsel to more than five times as much by par value than at this time last year. The firm jumped 55 spots, with $3.2 billion in par as of June 30.

The Newark, N.J.-based McCarter & English was propelled by eight issues totaling $3.1 billion during the first quarter. The firm tacked on an additional $119 million this past quarter.

Davis said that firms with broad sets of skills and deep resources will see the most success as transactions become less uniform and regulations in the fixed income industry are tightened.

“The IRS has been much more aggressive on auditing bonds and the SEC has been even more of a presence in enforcement of the disclosure rules,” Davis said. “There’s an increasing recognition and placement of importance on the depth of resources, the expertise and experience on tax matters and on disclosure matters, all three of which play to our strength.”

Orrick also led negotiated bond deals with $17 billion in par. Norton had the second-most negotiated bond par, with $7.2 billion across 159 issues. Hawkins was third in the category, with just under 7 billion in par.

The bond insurance industry, dominated by the lone suriving Assured Guaranty since the financial crisis, began to split this year for the first time since 2009 due to the emergence of Build America Mutual, which accounted for 38 percent of the market share, down slightly from 40 percent in the first quarter.

Assured wrapped $3.4 billion, or 60 percent of the market, across 271 issues, while BAM insured $2.1 billion in deals with 290 issues, the data show. A single $107 million deal wrapped by Berkshire Hathaway Assurance represented 2 percent of the market.

“As yields moved higher during the second quarter, we saw increased demand for our insurance,” said Robert Tucker, managing director of investor relations and corporate communications at Assured. 

Assured’s second quarter market share rose to 64 percent from 55 percent in the first quarter. The insurer wrapped 89 percent more par than it did in the first quarter of 2013, totaling $2.2 billion.

BAM launched in July 2012 and has wrapped 304 transactions as of June 28, according to the company’s website. Limiting its insurance to state and local obligations, BAM’s insurance has primarily been for deals involving public-purpose bonds such as school districts and utilities.

“Over the first half we have steadily increased our insured portfolio with a highly rated portfolio that is heavily weighted toward A+ credits,” Sean McCarthy, chief executive officer of BAM, said in an e-mailed statement.  “We look forward to further solidifying our base among small to mid-sized issuers, who as issuer-members of BAM achieve lower interest rates on their insured issues and additional benefits related to our mutual status.”

US Bank NA and Bank of New York Mellon led trustees. US Bank participated in 442 issues totaling $29.7 billion as of June 30, while BNY Mellon worked on 370 issues with a par amount of $29.1 billion.

The Texas Permanent School fund was the top guarantor for the fourth consecutive year, with 211 issues totaling $4.7 billion.

Wells Fargo Bank provided the most letter of credit-backed bonds by principal amount, with four issues totaling $240 million. JPMorgan Chase, who started the first quarter in the top spot, followed in second with $189 million in principal.

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