In 2004 the asset-backed securities market swelled to $858 billion, and while 2005 is expected to be another solid year, analysts are already predicting a drop-off from that record shattering number. But even if the market soars to new heights again next year, 2004 will likely be billed as a breakout year for ABS that saw some old standards maintain their share of the market as underwriters, and saw some new faces stepped into the lead as well.

Citigroup Global Markets remained at the top of the league tables this year, underwriting almost $83 billion worth of securities, and growing its ABS underwriting business by 22%, versus 2003, while Countrywide Securities took the industry by surprise, tripling its volume under to finish second with $74 billion. Just like in the issuance category (see story p. 5), Countrywide made tremendous progress as an underwriter in 2004, upping its market share over 200% from $24 billion and improving it from eleventh place in the 2003 rankings.

Lehman Brothers was a close third with $73 billion, up 40% from its 2003 issuance, basically maintaining its same position in the rankings. Among the firm's most significant transactions for 2004 were a $5 billion mortgage warehouse structure for Thornburg Mortgage, and a $1.4 billion tranche of triple-B credit card securities for American Express.

Credit Suisse First Boston increased its underwriting 70% to $38 billion to finish fourth for the year, up from seventh last year. Managing Director Greg Richter, head of the ABS origination for CSFB, attributed the firm's performance to its multi-pronged approach, rather than a focus on one specific asset class. "In 2004, we have continued to maintain a broad presence in most asset categories and with the key issuers in those categories," said Richter.

Countrywide was the leader in the real estate ABS category with its entire total in that class, but Bear Stearns managed a healthy jump to fourth, from tenth in 2003. According to Tom Marano, head of ABS and MBS, in 2004 Bear Stearns was able to beef up its home equity underwriting by purchasing collateral directly from small mortgage originators. "[We] delivered capital markets pricing down to the smaller sellers," said Marano. That added channel of collateral not only helped Bear Stearns in the real estate category but caused it to nearly double its total underwriting volume from 2003 to almost $57 billion. Marano said for 2005, the firm plans to add more sellers of loans and to offer more ARM products. The firm is also looking to expand its international expertise through origination of residential subprime loans in the U.K., according to Marano.

The auto ABS market was evenly split among the top five managers in that market. Deutsche Bank Securities, which ranked tenth overall, was the leader with nearly $10 billion spread over 16 issues, followed by dethroned leader JPMorgan Securities with $9.2 billion and Citigroup with $8.7 billion. Wachovia Securities slid into fourth place, running the book for $7 billion of auto ABS, and Banc of America Securities rounded out the top five with $6.8 billion sold.

Thanks to its purchase of Bank One Corp. JPMorgan lead the way in credit card ABS, managing nearly $17 billion to clamp down a 31.6% market share, while traditional leader Citigroup sold $11 billion and a 21% market share.

Citigroup topped the charts for student loan ABS underwriters with 10 deals placed with investors, totaling $7.6 billion and a 16.4% share of that sector. Merrill Lynch managed $5.8 billion and Deutsche Bank registered $5.2 billion as well. Merrill managed $15 billion in CDOs to take the checkered flag in that category and a 17.2% market share in 2004 (see story p. 11). Citigroup also grabbed a 30.8% share of the $12.8 billion dealer floorplan market, managing nearly $4 billion spread over six securitizations, and was the only player in the stranded cost market with one $46 million transaction.

Copyright 2005 Thomson Media Inc. All Rights Reserved.

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