Debt may have been the savior of the underwriting markets in 2001, but an early peek at the half-year debt league tables reveals little to get excited about, as both the investment-grade and high-yield markets are turning in flat to dismal performances.
High-yield corporate bonds may well be the most notable laggard, considering that many high-yield market players have spoken so positively of the market this year and its new receptivity to smaller, less established issuers. As of June 20, however, U.S. high-yield’s total underwriting volume for the year was $35.8 billion, down almost 40% from the $49 billion posted by that time in 2001. In all of 2001, U.S. high yield was up 117% to $76.3 billion from $35.1 billion in 2000.
Credit Suisse First Boston, which inherited much of the 1990s debt champion Donaldson, Lufkin & Jenrette’s high-yield group when CSFB purchased DLJ in the fall of 2000, continued its current dominance of the junk sector. CSFB looks once again to be the number-one high-yield underwriter, and its market share has grown to 18.6% as of last week compared with 15.2% in the same period last year.
The most improved performance, however, comes from the ambitious high-yield operation at Deutsche Bank, which has been continuing to poach top officials from rivals such as Merrill Lynch. Where many of its competitors laid off junk bond officials during the latter months of 2001, Deutsche was continuing a low-profile but intensive hiring spree, nabbing such pros as Merrill’s former chairman of global leveraged finance Chris Johnson earlier this year.
The results are paying off. Deutsche has sailed up to third place as of the half-year mark, with $3.5 billion in deals underwritten and a 9.9% market share, compared with its seventh-place ranking at this point in 2001 and a 6.8% market share.