Assured, Orrick hang on to top spots as 1st-quarter volume sinks

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The top municipal bond insurance and counsel firms maintained their positions atop the league tables for the first quarter, building market share amid a 32% drop in bond issuance.

Volume for Assured Guaranty, the bigger of two remaining municipal bond insurers, slipped 23.8%, while Orrick Herrington & Sutcliffe LLP remained first among legal counsel, limiting its drop in deals by par value to 25%.

"New-issue market volume and insured volume were somewhat constrained by the decrease in refundings, caused in part by the tax law changes," said Robert Tucker, senior managing director of communications and investor relations for Assured. "Assured Guaranty garnered 62% of the primary-market insured par sold in the first quarter of 2018, a 5% increase from last year’s first-quarter market share and 160% of the par volume of all other insured par sold in the quarter."

Assured insured $2.24 billion of par value in 119 transactions in the first quarter of 2017, according to data from Thomson Reuters. That compares with $2.94 billion in 181 deals a year earlier. The figures include Assured's subsidiary Municipal Assurance Corp.

Orrick accounted for $9.38 billion in 72 deals or 15.3% market share among legal counsel in first quarter of 2018, down from $12.50 billion in 101 deals or 14.5% market share.

Justin Cooper, partner at Orrick, co-chair of its public finance practice and affordable housing finance group, said the practice benefited from expansion of its business in three states – California, Texas and New York – that account for almost one-third of municipal market volume.


Tucker said Assured benefited from institutional investors’ continued preference for its insurance on larger transactions. AGM was selected on 10 different transactions to insure more than $50 million of par, including three where it insured more than $100 million of par.

"The three deals, totaling over $800 million of Assured Guaranty insured par, were $419 million for a portion of the Commonwealth of Pennsylvania’s $1.5 billion state-appropriation-backed bond, $266 million of Arlington, Texas sales tax bonds, and $152 million for Atlanta Fulton County Recreation Authority," he said. "All three were rated single A or better. In addition to those 10 large deals, we guaranteed an additional 109 small and medium-sized new issues. Adding our secondary market policies, our total first-quarter insured par sold exceeded $2.4 billion.”

For the first quarter, Assured and Build America Mutual, wrapped a total of $3.63 billion in 258 issues, down from $4.93 billion in 342 transactions during the time the previous year. That doesn't include the $263 million wrapped in the first quarter of 2017 by National Public Finance Guarantee, which has since dropped out of insuring new business.

BAM's insured principal amount dipped to $1.39 billion across 140 deals, from $1.98 billion the same time the year before.

“It was a successful start to the year for BAM, with several notable transactions, including a $171 million sale of sales-tax bonds by the City of Arlington, Texas," said Sean McCarthy, CEO of BAM. "We are beginning to see some shifts in the buyer base for municipal bonds, driven by the new tax rates that became law at the end of 2017. We believe those trends favor buyers who prefer insured investments, and will grow during 2018, driving strong utilization of our guaranty among smaller cities and school districts who are marketing their bonds primarily to local retail investors."

Legal counsel

Cooper said with Orrick's expansion in Houston and the addition of offices in Austin and Dallas earlier this year, the firm is a major player in the three states that generate the greatest amount of public finance transactions.

"We believe that we have pulled well ahead of other bond counsel firms," he said. "We have the largest public finance practice in the country, measured by number of public finance lawyers and also by number of tax lawyers specializing in tax-exempt municipal bonds.

"Taken together, those three states (NY, CA and Texas) alone account for roughly [30% / one third] of the national market volume," he said. "No other bond counsel firm has a top tier practice in all three states. Our practice is national, not in any way limited to these three states. Nationally, our market share is about [12%], [nearly twice] the market share of the second ranked firm and [2 ½%] times the third and fourth ranked firms."

Cooper added that the scale and diversity of Orrick's public finance practice gives it unique insight into financing alternatives, tax considerations, problem solving options, hot disclosure topics, enforcement risks, best practices and where and what creative solutions or alternatives may be considered.

"In other words, we built this scale and geographic practice diversity to better serve our clients, which we are doing," he said. "Coupled with the quality of the lawyers and the non-lawyer professionals who are part of our public finance team, this is how we have maintained and extended our number one lead bond counsel rankings."

Norton Rose Fulbright came in second with $5.25 billion or 8.6% market share. Hawkins Delafield & Wood LLP was next with $3.36 billion or 5.5% market share with 59 deals, down from the $6.06 billion or 7% market share over 85 deals during the year before.

"The trend for many years has been for increasing specialization and depth due to the ever-increasing complexity of municipal bond regulations, especially in the tax and securities areas, and the sophistication of transactions," said Howard Zucker, managing partner at Hawkins. "Today, more than any time 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 and regulatory compliance after issuance.

"For the first quarter of 2018, Hawkins had the most bond volume of any law firm as Disclosure Counsel (equal credit table), the second most as Underwriters' Counsel, and the third most as Bond Counsel. Lawyers in all nine of our offices were very busy in all major sectors. Our relationships with our clients and the quality and experience of our attorneys are the keys to our achievements," Zucker said.

Zucker added that his firm has more attorneys devoted to the full-time practice of public finance than any other law firm.

"Hawkins is 164 years old, and has been doing public finance for over 135 years, but we know we cannot rest on our laurels; the culture of our Firm is that we come to work every day to earn and deserve the trust and confidence of our clients," he said.

Kutak Rock LLP was fourth with $2.92 billion and Alston & Bird LLP was fifth with $1.71 billion. Rounding out the top 10 were: Chapman and Cutler LLP, McCall Parkhurst & Horton LLP, Eckert Seamans Cherin & Mellot LLC, Gilmore & Bell PC and Mintz Levin.

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Rankings Bond insurance Bond counsel Assured Guaranty Build America Mutual Orrick Herrington & Sutcliffe Hawkins Delafield & Wood LLP