Assured, Orrick Top League Tables Amid Stiffer Competition

Assured Guaranty and Orrick, Herrington & Sutcliffe LLP held onto their No. 1 rankings as competition among municipal bond insurers and counsel heated up through the first three quarters of 2016.


Assured retained the top spot for bond insurers, as it has since 2009, insuring $10.08 billion in 672 transactions for a 54.4% market share through the first nine months of 2016, data from Thomson Reuters showed. The par value of Assured's transactions, including subsidiary Municipal Assurance Corp., slipped from $11.89 billion in 806 deals or 60.6% market share after three quarters in 2015.

In the bond counsel rankings, Orrick held on to its first-place position, as it has done dating back to 1998, though its market share slipped to 9.9% from 10.4%. Orrick finished the first three quarters of 2016 with a par amount of $31.87 billion or 9.9% market share in 334 transactions, compared with the $31.08 billion or 10.4% market share in 205 transactions during the first nine months of 2015.

Insurers and counsel are competing for slices of a bigger pie, as long-term municipal bond volume has surged ahead of last year's pace, putting the market on track to surpass the $400 billion plateau and possibly challenge the all-time high of $433.27 billion set in 2010.

Municipal bond insurance penetration is lagging behind where it was at this point last year, hovering at 5.52%, down from 6.18%. Through Sept. 30, the principal amount wrapped by Assured, Build America Mutual, and National Public Finance Guarantee – the three insurers writing new business – totaled for $18.53 billion in 1,404 transactions this year. In the same period of 2015 they were responsible for $19.62 billion in 1,467 deals.

Insurance penetration of 4.90% in the third quarter dropped the yearly rate from 5.85%, where it was June 30.

"In a quarter marked by historic low municipal interest rates and tight credit spreads, we remained the market leader while continuing to adhere to our strict underwriting process and disciplined pricing," said Robert Tucker, senior managing director of communications and investor relations for Assured. "The $3.2 billion of new issue par we insured was 56% of all insured par sold during the third quarter and 45% more than the par written by any other bond insurer. The 206 transactions we insured also led the industry. Including our secondary market insurance, Assured Guaranty insured a total of $3.4 billion in par for the third quarter of 2016 and $11.1 billion for the first three quarters."

Tucker said Assured continued to see demand for insurance on larger deals, which tend to have a strong institutional investor base.

"During the first three quarters, we were selected to insure more than $100 million of par on 13 different transactions, totaling approximately $1.9 billion of insured par, four of which sold in the third quarter," he said.

BAM is ahead of where it was after the first nine months of the year last year, as the par amount insured rose to $7.79 billion in 659 deals from $7.34 billion in 645 deals. Its market share rose to 42% from 37.4%.

"BAM had another excellent quarter, insuring $2.2 billion of new issues, which was an increase over the same period in 2015 and continued the growth trend we've seen all year," said Seán McCarthy, BAM's CEO. "Our average transaction size rose again, which reflects the demand from institutional accounts who prefer larger par size new issues, and we also led the market by insuring $531 million of bank-qualified issues, where many buyers rely on the enhanced transparency provided by BAM Credit Profiles."

Additionally, McCarthy said BAM continued to see strong demand for its guaranty in the secondary market, where investors can act directly to obtain insurance.

"Through the first three quarters, we insured approximately $600 million of bonds in the secondary market, which puts us on track to well exceed 2015's full-year total of $611 million," he said.

National is also trending up, as its amount insured increased to $658 million in 74 issues from $386 million and 16 issues after the first three quarters of 2015. National market share edged higher as well, to 3.6% from 2%.

"With only a fraction of Single-A and Triple-B issuers using bond insurance, we think the market affords substantial opportunities for the bond insurers to write more business even in the current low interest rate environment," said Tom Weyl, head of new business development at National. "Despite the continuing low bond insurance penetration, we are pleased with our progress with re-establishing National as a leading provider of municipal bond insurance. While keeping with our goal of steady and safe growth over the long-term, we have increased our new business production for yet another quarter."

Weyl also expressed confidence that National's share of insured business will further increase, "as more issuers, underwriters and advisory firms better understand and become more comfortable with National's financial strength and value proposition."


Legal Counsel

For the third quarter alone, Orrick had $9.74 billion in 116 deals or 9% market share.

"The regions where we have offices, East Coast, West Coast and Texas, have definitively come out of recession conditions, we are very busy," said Justin Cooper, partner and co-chair of public finance practice for Orrick. "We are particularly encouraged to see that our Texas office, which we only opened in mid-January, is off to a very successful start."

Cooper said that the firm continues to grow, having added 9 associates in the past 12 months and is continuing to build for the future. Although refundings continue to drive the market, Cooper said that Orrrick is pleased to see new money borrowings picking up.

"We are seeing a lot of the complex financings for which we are known nationally, such as P3 (highway, transit, alternative energy, student housing, proton therapy, water/wastewater), tobacco restructurings and refundings, new gas prepay deals, hotels and secondary-market repackaging's, etc.," he said.

Cooper said increased emphasis on tax and securities law compliance and regulatory issues plays to the firm's strengths, as clients and potential clients are increasingly turning to Orrick because they appreciate the depth and breadth of the firm's expertise.

Hawkins Delafield & Wood LLP stayed in second place with $16.02 billion or 5% market share over 270 deals, all slightly down from the $16.99 billion or 5.7% market share over 308 deals the firm finished with during the same period of time last year. For the third quarter, Hawkins had a par amount of $4.92 billion or 4.5% market share in 96 deals.

Norton Rose Fulbright ranked third with $14.28 billion, followed by McCall Parkhurst & Horton LLP with $12.35 billion and Kutak Rock LLP with $11.89 billion.

Rounding out the top 10 are Squire Patton Boggs, Chapman and Cutler LLP, Stradling Yocca Carlson & Rauth, Gilmore & Bell PC and Bracewell LLP.

Hawkins held the top underwriters counsel spot and pushed its lead further, finishing the first three quarters of 2016 with $22.92 billion or 10.3% market share in 111 deals, which compares to $15.34 billion or 7.2% market share in 129 deals in the first nine months of 2015.

"Our lawyers in all of our nine offices were very busy in all sectors, especially health care, housing, public power and governmental purpose," said Howard Zucker, managing partner at Hawkins. "Among the deals in which we participated that were noteworthy, we were counsel to the underwriters in the $2.4 billion dollar bond issue for the rebuilding of LaGuardia Airport that was a P3 transaction, and Bond Counsel for the refunding of bonds of the NYS Utility Debt Securitization Authority."

Zucker said that the relationships with clients and the quality and experience of the attorneys are the keys to the firm's achievements. Hawkins is 162 years old, and has been doing public finance for over 135 years.

"We come to work each and every day to earn and deserve the trust and confidence of our clients. We have more attorneys devoted to the full-time practice of public finance than any other law firm. The trend for many years has been for greater and greater specialization and depth in the practice due to the ever increasing complexity of municipal bond issues, the highly extensive regime of federal tax regulations, and the heightened disclosure expectations of the market and of the SEC. Today, more than ever before, law firms that want to be leaders in public finance have to be willing to commit significant resources to have the full range and depth of expertise in order to advise clients in the navigation of the matrix of issues in bond financings," said Zucker.

Norton Rose Fulbright finished second among underwriters' counsel with $14.29 billion, Stradling Yocca Carlson & Rauth was in third with $9.66 billion, and Orrick was fourth with $8.52 and Kutak Rock LLP came in fifth place with $8.03 billion.

Rounding out the top ten are Nixon Peabody LLP, Andrews Kurth LLP, Squire Patton Boggs, Greenberg Traurig LLP and Bracewell LLP.




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