For an illustration of the upheaval in the credit enhancement sector, look at the 10 highest-ranked standby purchase agreement providers in the first half, and then look at their ranks this time last year:

Two, six, n/a, four, 24, n/a, 10, 22, 25, n/a.

The rankings for bond insurers and letter of credit providers in the first half of 2009 bear minimal resemblance to the past half-decade.

Some of the companies that in past years were at or near the top of the Thomson Reuters tables listing credit enhancement providers are nowhere to be found in the tables for the first six months of this year.

And some of the participants nowhere to be found in the past are now near the top.

Bond insurance in particular offers a stark contrast. Downgrades by the three major rating agencies have upended the value of insurance, squeezing penetration rates and forcing several major insurers to find new ways to stay afloat.

Just three insurers have been active this year. Two of them - Assured Guaranty and Financial Security Assurance - merged and now form the dominant insurer.

The two companies combined for an 83% market share in the first half, with 1,178 insured issues at $20.87 billion face value.

That was mostly Assured Guaranty, whose insured principal amount for the period fell only slightly, to $17.81 billion.

FSA's underwriting collapsed to just $3.06 billion from $34.08 billion in the first six months of last year.

Dominic Frederico, chief executive of the merged company, said he expects FSA's volume to bounce back not to where it was last year, but perhaps to a level similar to Assured.

He also welcomes more competitors. Municipalities need more insurance than Assured and FSA are capable of providing, he said.

"You still hear a lot of complaints in the market that there isn't enough capacity," Frederico said. "We can only do so much business."

Warren Buffett's Berkshire Hathaway Assurance Corp. was picky in the first quarter and even pickier in the second quarter.

The company insured four bonds in the first three months of the year. In April through June, it insured one.

Berkshire's market share in the first half was 2.3%, with $583 million in insured bonds.

As if further demonstration of the shake-out in the industry were needed, consider this: if the entire bond insurance industry this year were combined and annualized, the combined entity would have been in fourth place in 2005.

In 2005, the top nine insurers wrapped more than 7,000 issues. This year the industry is on pace to wrap 2,365.

More than $228 billion in insured bonds came to market in 2005, representing well more than half of municipalities' borrowings in the bond market.

First-half insured issuance was $21.45 billion, or about $43 billion annualized. Insurance penetration in June was less than 5%.

The rankings for letter of credit providers also show a new mix.

The turmoil in financial markets forced downgrades of many banks, pushing some of them out of the market for short-term liquidity enhancement.

LOCs are often used on short-term instruments like variable-rate debt obligations, which need stellar ratings to be eligible for purchase by money market funds.

Those banks whose ratings survived the crisis enjoy a less competitive market with more attractive pricing, according to Rich Raffetto, who is in charge of the public sector banking group at U.S. Bank.

U.S. Bank rocketed from No. 5 this time last year to No. 1 in the first half of this year.

The Minneapolis-based bank provided 51 letters of credit with a face value of $2.21 billion in the first half.

While this only marked growth of 7.4% over last year, it nearly tripled the bank's market share, to 19.4%.

"Our standout from a credit ratings perspective has helped us to gain market share," Raffetto said. "We are benefiting from that flight to quality."

JPMorgan was second with $2.15 billion in enhancement in the first half. JP-Morgan's market share nearly doubled to 19%, despite a 47% decline in business.

Bank of America, which was No. 1 in the rankings this time last year, slipped to No. 3. The Charlotte, N.C.-based bank's LOC volume tumbled 83%, knocking more than nine percentage points off the company's market share.

This list is replete with banks that did not sniff the top 10 last year. Branch Banking & Trust Co. leaped from No. 17 to No. 5, with $707.7 million in LOCs.

Harris NA, which was No. 34 last year with a 0.3% market share, is now No. 7, with a 2.6% share.

Northern Trust Co. bounded from No. 26 to No. 10, improving its market share to 2.2% from 0.6%.

JPMorgan led the market for standby purchase agreements, with $282.4 million and a 21.3% market share. US Bank was second with $230 million and a 17.4% share.

In the law firm rankings, Orrick Herrington & Sutcliffe LLP retained the top spot in bond counsel and disclosure counsel.

The firm advised on $26 billion in deals in the first half, registering 13% growth over last year and improving its market share to 13.3% from 10%.

Hawkins Delafield & Wood LLP held onto the No. 2 slot and Sidley Austin LLP retained the No. 3 spot.

Sidley Austin overtook the top spot in underwriter's counsel, working on $9.32 billion in par value. That propelled the firm from the No. 3 spot last year.

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