JPMorgan Securities LLC pulled away from Citi in the third quarter to solidify its hold on the No. 2 spot among municipal underwriters facing a year marked by fewer public finance issues.
The move continues a reorganization of the top 10 underwriters that began in the first half of this year, with just Bank of America Merrill Lynch and Morgan Stanley retaining their 2012 rankings of No. 1 and 4, respectively.
Still the most prolific municipal underwriter, Bank of America was responsible for $35.4 billion in par, or 15% of the total market, of deals through Sept. 30, according to Thomson Reuters data. That’s almost a 10% drop from this time last year, when the league leader was senior manager to $39.1 billion.
The municipal industry produced $237.7 billion in total new issue volume so far this year, a 13% decline from last year’s total of $275.1 billion by this time.
JPMorgan was book runner to $29.2 billion of deals by Sept. 30, a 6% drop from this time last year, though enough to surpass last year’s second-biggest manager, Citi, whose managed par declined 17% from this time a year ago. JPMorgan’s small drop in business relative to its peers brought the gap between No. 1 BofA and its runner-up to $6.2 billion, narrower than the $7.2 billion lead it had this time last year.
Morgan Stanley’s business declined more from a year ago than any other top 10 underwriter, with total par amount down 24%, to $15.4 billion, from $20.3 billion.
Piper Jaffray & Co. was the only top 10 underwriter to increase its business from 2012, with a par amount of $8.8 billion, compared with $8.3 billion this time last year.
“It’s a very challenging market as far as absolute issuance,” Paul Palmeri, head of public finance at JPMorgan, said in an interview.
RBC Capital Markets and Wells Fargo & Co. remained in the No. 5 and 6 spots, respectively, which they obtained in the first half of this year. The firms’ jumps pushed Goldman Sachs & Co and Barclays down to the seventh and eighth positions, respectively.
“We have made significant investments in building our Public Finance team,” Phil Smith, head of government and institutional banking at Wells Fargo, said in an email. “Our ultimate business strategy is to earn trusted relationships with our clients. When we do that, the league table rankings tend to take care of themselves.”
RBC took 5.8% of the market, or $13.8 billion in par, across 468 issues, while Wells claimed 5.4%, or $12.8 billion, in just 159 deals, data show.
JPMorgan topped the leaderboards in total issuance relating to healthcare, higher education and housing deals, Palmeri said. The bank took 26%, 17% and 14% of those parts of the market, compared with an overall market share of 12%, Palmeri said.
“We attribute our success to efforts over the last couple of years to continue upgrading specific spots within banking and improving relationships and expertise,” Palmeri said. “As a result, have been given more mandates across the industry sectors.”
The company has expanded into regions outside the northeast to bolster market access, Palmeri said.
“We just added new folks in the west coast and in Texas. That’s the kind of thing we’re doing, looking for opportunities to fill in spots where we need additional coverage,” Palmeri said.
Negotiated rankings remained mostly unchanged from a year ago, with Goldman Sachs & Co. retaining its No. 6 position and Wells Fargo edging past Barclays for the No. 7 ranking.
Negotiated issues totaled $183.2 billion in par amount, down 16% from $218 billion a year ago. Total par amount for competitive issues fell 4% from $57.1 billion to $54.6 billion.
Bank of America, JP Morgan and Citi all retained their respective overall rankings for competitive issues, while Robert W Baird & Co Inc made an appearance in competitive issues in the No. 4 spot. Hutchinson Shockey Erley & Co. and Janney Montgomery Scott LLC were ranked ninth and tenth with $1.25 billion and $1.16 billion in par amount, respectively.
Public Financial Management Inc. was the top financial advisor to all bonds, with $31.1 billion in business by Sept. 30, the data also show. Public Resources Advisory Group was second as advisor to $18.7 billion in par amount of deals.
The State of California was the top issuer, with $5.9 billion of issues as of Sept. 30.