Morgan Stanley was the only municipal bond underwriter in the top five to increase the volume it managed the first half of this year.
The amount Morgan Stanley handled jumped to $12.4 billion from $11.7 billion in the same period last year, boosting its market share to 8.6% from 6.9%, according to mid-year data from Thomson Reuters. Charlie Visconsi, managing director and co-head of public finance at Morgan Stanley said the positive performance can be attributed to the recent additions to Morgan Stanley's public finance team.
"On the negotiated front we were one of few firms hiring people: we hired nine in public finance this year," Visconsi said. "We're in a nice position and our market share shows it. We are hiring, growing, [and that] comes through with [our] first half results."
This year's low volume has driven down the volume most underwriters have managed this year from last year. Bond sales totaled $150.5 billion as of June 30, compared with $179.1 billion last year, according to data provided by The Bond Buyer and Ipreo.
The volume overseen by the first-place underwriter Bank of America Merrill Lynch dropped the most of the top five. The amount it managed fell to $19.3 billion in the first half from $25.2 billion for the same period in 2013.
Second-ranked JPMorgan also experienced a decline with $16.1 billion handled in the first half of 2014, down from $19.8 billion during the same time last year.
"Our position in marketplace is reflective of volume numbers being down, I think all underwriters across board are down," Jamison Feheley, managing director of public finance banking at JPMorgan Securities, said in an interview.
Morgan Stanley said its expanding public finance team has helped it combat the low-supply environment. Brian Wynne, managing director and co-head of public finance at Morgan Stanley, pointed out in an interview out that Morgan Stanley's performance in the second quarter since it increased its public finance team is better than what it achieved in the first quarter.
Morgan Stanley's rank rose to fourth as of June 30 from seventh as of March 31. For the first quarter Morgan Stanley handled only $3.5 billion.
Morgan Stanley brought $9.1 billion negotiated dealss to market and underwrote $3.32 billion competitive issuances as of June 30. It had only managed $2.1 billion negotiated issuances and $1.3 billion competitive sales in the first quarter.
"If you isolate our Q2 results our negotiated market share was 10.6% and competitive 10.3%, we have definitely seen an acceleration or increase in market share," Wynne said. "Our market share picked up in the second quarter vs the first quarter based on some of our hires."
The bank has been expanding its municipal securities team since it merged its institutional and wealth management municipal desks in March.
The bank recently hired such well-known professionals as Victor Radina, executive director of health care, from Citigroup Global Markets. It also brought in Ryan Vollmer, executive director of western infrastructure from RBC Capital Markets.
"We're still looking to selectively hire and grow. It has to be the right fit for us with person or people hiring; we are still actively in dialogue with some people," Wynne said. "We still have a mandate from firm to grow the public finance business."
Wynne said that two large negotiated refundings also boosted Morgan Stanley's rank from the first to the second quarter.
One was for New York City that was just over a billion and one for state of Connecticut that was $822 million, he said.
"[Morgan Stanley used] creative banking to identify refundings early," Wynne said.
Feheley said that JPMorgan is also concentrating on the negotiated space and said that part of their strategy is to be one of the top negotiated underwriters. The bank placed third for negotiated underwriters managing $10.2 billion with a 9.5% market share. Its market share for negotiated sales was 6.7% in the first quarter, when it ranked fifth.
"We were one of the leading negotiated underwriters in Q2 and more than doubled our volume over Q1," he said.
Feheley said that in terms of negotiated market share JPMorgan had a 40% increase. He attributed part of this to them leading the largest negotiated transaction in the second quarter, the approximately $1.6 billion L.A. unified school district deal.
"We were also lead manager for Metropolitan Washington Airport authority's $422 million [issuance], and the roughly $500 million [deal] for the Texas Public Finance Authority," he said.
Barclays Capital was the biggest mover in the underwriter ranks for the first half of this year. Barclays surged up to sixth place handling $9.2 billion from 10th place with $6.5 billion for the same period in 2013.
Part of the reason Barclays' rank has risen so much is that it underwrote Puerto Rico's $3.5 billion general obligation issuance in March, the largest deal so far this year. It managed to hold its own in the second quarter without the boost from the commonwealth's mammoth deal.
In the first quarter it ranked fifth managing $4.4 billion, and underwrote $4.2 billion during the second quarter.
Barclays didn't responding to calls or emails about its underwriting for the first half of this year by press time.
Citi came in third handling $14.9 billion, the same place it was last year when it managed $18.6 billion. Wells Fargo also held the same rank, at No. 5, with $9.2 billion for the first half of 2014.
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