As municipal bond market volume started to normalize during the second quarter, the rankings of municipal underwriters and financial advisors league tables had a familiar look. Bank of America Merrill Lynch, Public Financial Management and the State of California topped league tables.
Volume for the top 12 underwriters dropped 16.9% to $155.91 billion in 4,296 transactions for the first six months, from the $187.17 billion in 5,275 deals during the same period the year before. At the end of the first quarter, volume was down by 28%, with PFM, Citi and JPMorgan all lower than usual in the rankings.
BAML underwrote $27.09 billion in 244 issues in the first half, or 17.4% market share, compared with $27 billion in 288 transactions and 14.4% market share in the first six months of 2017. The largest deals it ran the books on in the second quarter included the Regents of the University of California’s $1.23 billion and the California Municipal Finance Authority’s $1.81 billion.
Citi accounted for $20.30 billion or 13% market share for the half, compared with from $24.08 billion and a 12.9% market share. The firm was lead-manager on the Golden State Tobacco Securitization Corp.’s $1.67 billion deal and the New York Transportation Development Corp.’s $1.38 billion transaction.
Morgan Stanley moved up to third place, ending the first six months of the year with $13.56 billion or 8.7% market share, down from the $14.30 billion it underwrote during the same period of the previous year.
JPMorgan was in fourth with $12.95 billion or 8.3% market share, down from the $17.68 billion or 9.5% market share during the first half of 2017.
Jamison Feheley, head of public finance banking at JPMorgan, said the year has played out very close to the firm's initial expectations. While first-quarter volume was among the lowest on record going back over the last 15 years, he said, volume trends for the full year are currently on pace with the firm's municipal strategist’s original projections for 2018.
"Irrespective of market conditions, our approach stays consistent in that we constantly strive to provide high-level execution and value-added solutions for our clients," he said. "For J.P. Morgan in the second quarter, we more than doubled our new issue volume versus the first quarter and we expect issuance to continue to accelerate through the summer months."
Bright spots included increased demand from international investors, primarily on taxable offerings, he said.
"We have had notable success in expanding the international investor base for issuers on several large taxable offerings in the market so far this year," Feheley said. "We continue to invest and grow the strength of our investor marketing platform which has provided meaningful benefits to our issuer clients."
RBC Capital Markets was fifth with $11.11 billion in the first half of 2018, down from $13.39 billion a year earlier. The firm remained in fifth place where it was at this point last year, as its market share dipped to 7.1% from 7.2%.
"Overall we are pleased with our results for the first half of 2018, particularly so in the negotiated market where we gained market share and ranking,” said Bob Spangler and Jim Tricolli, RBC's co-heads of municipal finance.
“These results were driven, in large part, by our market leadership in single family housing and pre-pay gas bonds. Looking ahead, we are confident we will continue to leverage the strength of our client relationships, talented pool of bankers, and our distribution platform to solidify our market share gains."
Goldman Sachs moved up to sixth with $8.55 billion or 5.5% market share, compared with $9.58 billion and a 5.1% market share when it was in seventh place at this point last year.
Jefferies made the biggest leap, rising to seventh place with $8.28 billion from 12th place with $4.92 billion. The firm’s market share rose to 5.3% from 2.6% during the same period. The firm ran the books on one of the largest transactions of the year, the New Jersey Tobacco Settlement Financing Corp.’s $3.15 billion transaction in April.
Raymond James, Wells Fargo, Stifel and Piper Jaffray rounded out the rankings. Wells, which was in sixth place at this point in 2017 with $10.33 billion, tumbled to ninth with $6.40 billion.
Public Financial Management regained the top spot with a par amount of $26.01 billion in 422 deals, good for a 19.1% market share. That compares with $27.62 billion in 526 deals or 17.4% market share.
“PFM will continue to help clients develop creative ways to manage debt portfolios and access capital as cost-effectively as their circumstances allow,” said John Bonow, chief executive officer and managing director for the PFM Group. “We may be in a new normal in terms of overall transaction volumes, but new money and refinancing needs will continue – at PFM we see it as our job to help clients participate in the markets as efficiently as possible and in ways consistent with their needs, knowledge and risk tolerance.”
Bonow added that with clients across the nation, PFM recognizes that there is a wide ranging sense of financial stability among the municipalities and non-profits we serve.
“Many institutions with crumbling infrastructure and significant deferred maintenance needs can no longer afford to wait for additional funding clarity from the federal government and are moving forward with projects to address major needs.”
Public Resources Advisory Group finished with $18.71 billion or 13.7% market share, compared with $24.88 billion or 15.6% market share a year earlier.
Hilltop Securities ranked third with $9.66 billion, followed by Municipal Capital Markets Group Inc., with $5.23 billion and then Acacia Financial Group rounding out the top five with $4.59 billion.
The State of California still sits atop the biggest issuers list for 2018. The Golden State has issued $4.33 billion, followed by the Dormitory Authority of the State of New York with $3.17 billion. The NJ Tobacco Settlement Finance Corp. is next with $3.15 billion, then the New York MTA with $2.29 billion, and New York City with $2.29 billion.