Some top municipal underwriters and financial advisors slipped from their accustomed places in the quarterly rankings, as a drought in deals left firms scrapping for slices of a smaller pie.
While Bank of America Merrill Lynch picked up where it left off to end 2017 –- leading the municipal bond underwriter rankings for the first quarter of 2018 -- Morgan Stanley rose past Citi into to second place and JPMorgan fell to seventh from fourth in the first quarter last year, according to Thomson Reuters data.
Public Resources Advisory Group overtook Public Financial Management Inc., atop the financial advisor league table.
The well of municipal bonds deals dried up, after back-to-back years of issuance exceeding $440 billion -- including record issuance year of $444 billion in 2016 -- and a rush to market at the end of 2017, when issuers clamored to close both private activity bonds and advance refunding deals ahead of the new tax laws.
"The chaos and uncertainty during the latter part of the fourth quarter in 2017 led many of our clients who are regular borrowers with sufficient transaction flexibility to accelerate planned issuances, especially advance refundings, to November and December of last year," said John Bonow, chief executive officer and managing director for the PFM Group. "That resulted, as expected, in some of the larger issues being moved out of the first quarter of 2018 even as the number of transactions remained robust."
Volume for the top 12 underwriters dropped 28% to $61.874 billion in 1,669 transactions for the quarter, from the $86.489 billion in 2,263 deals in the first three months of 2017. BAML, Morgan Stanley, Goldman Sachs and Jefferies were the only underwriters credited with a higher par amount than in the first quarter of 2017.
BAML underwrote $12.06 billion in 93 issues for the quarter or 19.5% market share, compared to $10.89 billion or 119 transactions and 12.6% market share. The largest deals it ran the books on in the first quarter included: the Los Angeles Unified School District’s $1.2 billion, the Oklahoma Development Finance Authority’s $1.16 billion and Port Authority of New York and New Jersey’s $832 million. In total, the firm was lead manager on 19 deals with a par amount of $100 million or larger.
Morgan Stanley climbed into second place, accounting for $6.81 billion or 11% market share, up from $6.29 billion or 7.3% market share. The firm was lead-manager on the state of California’s $2.18 billion, the Public Energy Authority of Kentucky’s $816 million and California Health Facilities Financing Authority’s $619 million.
“We’re pleased with the results for the first quarter,” said Brian Wynne, head of public finance at Morgan Stanley. “It was a combination of strong infrastructure and healthcare mandates from longstanding clients.”
Citi dropped to third place, ending the first three months of the year with $6.04 billion or 9.8% market share, down from the $13.95 billion it underwrote during the same period of the previous year, when it was in first place.
Goldman Sachs moved up to the fourth spot with $4.99 billion or 8.1% market share, up from the $4.97 billion or 5.8% market share during the first quarter of 2017.
RBC was fifth for the quarter with $4.88 billion, down from $7.11 billion. The firm dropped a notch, as its market share dipped to 7.9% from 8.2%.
Jefferies made the biggest leap, rising to sixth place with $3.40 billion from 10th place with $3.17 billion. The firm’s market share rose to 5.5% from 3.7% during the same period. The firm was on 15 deals in total, including three big ones: it ran the books on the Commonwealth Financing Authority’s $1.49 billion, New York City Transitional Finance Authority’s $1 billion and New York City’s $700 million.
"We are pleased that the momentum we enjoyed in 2017 has continued into 2018,” said Kym Arnone, managing director and joint-head of municipal investment banking at Jefferies. “We have been fortunate to lead high profile transactions for New York City, TFA, UConn and several tobacco issuers.”
The firm is picking up where it left off so far with the second quarter underway.
“We are also pricing $3.2 billion for New Jersey’s Tobacco Settlement Financing Corporation this week,” she said. “In the last three months we have also continued to make a number of strategic hires with Simon Wirecki on the west coast, Jaimie Scranton in Boston and Ryan Donovan in New York. Again we are grateful for the support of our clients and look forward to continuing this success for the balance of 2018 and beyond.”
JPMorgan slid to seventh place with $3.13 billion or 5.1% market share, compared with $7.71 billion or 8.9% market share a year earlier.
Wells Fargo is next with $2.44 billion, followed by Stifel, responsible for the most transactions with 115, and a par amount of 2.16 billion. Rounding out the list was Raymond James with $1.79 billion, followed by Piper Jaffray with $1.65 billion and Barclays with $893 million.
PRAG finished the quarter with $10.38 billion or 19.3% market share, compared with $11.27 billion or 15.3% market share a year earlier.
Public Financial Management finished second with a par amount of $9.27 billion in 156 deals, good for a 17.2% market share. That compares with $15.35 billion in 269 deals or 20.9% market share.
"PFM clearly values the trust placed in our financial and pricing advisory services by all types of issuer clients across the country," said Bonow. "The remainder of 2018 will likely be marked by continuous market upheaval across many markets and we will continue working closely with all clients to help them navigate the municipal market changes, federal funding uncertainty, balance sheet pressures, and systemic challenges in operations, funding needs and credit profiles."
Hilltop Securities ranked third with $3.81 billion, followed by Municipal Capital Markets Group Inc., with $2.54 billion and then Acacia Financial Group rounding out the top five with $2.17 billion.