Citi climbed past Bank of America Merrill Lynch to become the No. 1 book runner in the first quarter, building market share even as the par amount of municipal deals underwritten by the top 10 fell from a year earlier.
Public Financial Management Inc. remained atop the financial advisor league table and the state of California was the largest municipal issuer.
Citi closed the quarter with a par amount of $13.24 billion in 125 issues, or 13.8% market share, which compares with $13 billion in 130 issues or 12.5% market share during the first three months of 2015, according to data from Thomson Reuters. It was one of only four among the top 10 to increase its par from the year earlier.
“A majority of the financings on the negotiated side were refundings, actually more than half, and those were split between revenue bonds and GO bonds,” said David Brownstein, head of public finance at Citi. “We are seeing tremendous execution in the market, which is driven by investor demand, and that is helping to get refundings done, which is a component as to why we did well in the first quarter.”
The top 10 accounted for a total par amount of $93.04 billion in 2,636 transactions this year, down from the $100.04 billion in 2,892 transactions the same time period in 2015.
Citi has been and will continue to focus on distressed credits as well as working hard to help find solutions to infrastructure problems such as what is going on with the water crisis in Flint, Mich.
“We are very focused on finding solutions for clean water right now, and we are hoping others are also thinking through this to avoid another catastrophe,” said Brownstein. “I think we will have a dynamic year overall as a market. There’s a lot of work to be done.”
Bank of America Merrill Lynch dropped to No. 2, after finishing in first place for the first quarter of last year and for the entire year, though the gap between first place and second place had diminished as the year went on.
BAML finished the first quarter with $13.04 billion in 120 deals and a 13.6% market share, which compares with $13.19 billion in 119 deals and a market share of 12.7 percent a year earlier.
Wells Fargo made the biggest jump this quarter, spring-boarding to the third spot from seventh a year ago. Wells’ par amount of deals rose to $8.47 billion from $5.34 billion during the first three months of last year.
JPMorgan finished in fourth place with $8.43 billion and Morgan Stanley rounded out the top five with $6.95 billion.
Stifel had the second largest jump in the rankings, moving up from ninth place to sixth. Stifel concluded the quarter with a par amount of $4.65 billion this year versus $4.46 billion for the same time period of 2015. The St. Louis based full-service wealth management and investment banking firm also got credit for the most issues, having completed 247 deals this quarter versus 217 a year earlier.
RBC Capital Markets concluded the quarter in seventh place with $4.38 billion, followed by Barclays with $3.80 billion, Raymond James with $3.61 billon, and Goldman, Sachs with $3.60 billion.
Financial Advisors
Public Financial Management retained its perch atop the financial advisor league tables. PFM finished the quarter with a par amount of $18.55 billion in 332 deals, good for a 22.8% market share. That compares with $15.19 billion in 251 deals or 17.4% market share during the same time period of 2015.
“Even with the persistent uncertainty about domestic and international economic conditions, PFM expects municipalities to continue to address their significant backlog of deferred infrastructure investments,” said John Bonow, chief executive officer and managing director for the PFM Group. “Using both traditional funding approaches and through creative arrangements with public and non-traditional partners, we think that the pace of infrastructure funding will increase throughout the remainder of 2016.”
Bonow said PFM is gratified that the firm’s clients look to them for help to position themselves to take advantage of good opportunities to finance new project and refinance outstanding debt.
“Our relationships with clients extend well beyond debt management as we help them develop and manage suitable capital structures and sustainable operations,” said Bonow.
Public Resources Advisory Group was second with $9.21 billion and Hilltop Securities was third with $8.37 billion, as the two firms flip-flopped their respective positons from the first quarter of 2015.
The two biggest movers in the ranking were the firms rounding out the top five: Acacia Financial Group Inc. and KNN Public Finance.
Acacia moves from eighth place to fourth, after closing the quarter with $3.09 billion, while KNN posted a par amount of $2.36 billion, jumping to fifth this quarter from 16th last year.
Negotiated Underwriting
Citi claimed the top spot for underwriting negotiated deals, with a par amount of $10.09 billion. BAML was in second for the quarter, with $8.077 billion and JPMorgan finished third with $6.95 billion. Wells Fargo finished fourth with $6.55 billion and Morgan Stanley rounds out the top five with 4.69 billion.
Stifel which finished sixth in par amount with $4.45 billion in the first quarter, had the most deals with 216.
The only two firms with a higher par amount in negotiated deals in the first quarter than a year earlier were, Citi and Stifel. Overall par amount for all top underwriters for negotiated-only deals fell to $77.52 billion in 1,731 transactions this quarter from $82.40 billion in 2,029 transactions a year ago.
Competitive Underwriting
BAML finished the first quarter atop the ranking for competitive-only deals with $4.96 billion, followed by Citi with $3.14 billion. Morgan Stanley was third with $2.25 billion. Wells Fargo was fourth with $1.92 billion, as it made the biggest year-over-year leap, moving up from sixth place a year ago.
Robert W. Baird was fifth with $1.88 billion. Baird also completed the most competitive only transactions with 141, after leading the pack in that category a year ago with 136.
Golden Empire
Issuers from California and New York flexed their municipal market muscles, account for half of the top 22 issuers in the nation in the first quarter. Six of these top issuers are from New York, five from California and three from Texas.
The state of California leads the ranking with a par amount of $2.95 billion, most of which came on the $2.9 billion mega deal that priced on March 8.
“Our deal in March tells you what our emphasis is; we want to take advantage of the continuing opportunity for refundings while the rates remain low,” said Tim Schaefer, deputy treasurer, public finance, for California Treasurer John Chiang. Gov. Jerry Brown’s administration “is also focused on projects that are crucial to the state’s wellbeing, such as Proposition 1B for highway safety and traffic reduction and of course safe drinking water and educational facilities. We want to direct our resources to implementation of those goals.”
The New York City Transitional Finance Authority finished second for the quarter with $1.90 billion, followed by the Empire State Development Corp. with $1.65 billion.
The city of Houston was fourth with $1.51 billion and the Trustees of the California State University rounded out the top five with $1.38 billion.
The Metropolitan Transportation Authority just missed out on the top five, finishing with $1.36 billion. The state of Washington was next, followed by the Los Angeles Unified School District, the Florida State Board of Administration Financial Corp and the state of Massachusetts.
