Citigroup Global Markets, the leading ABS underwriter last year, has sprung off the blocks on the right foot, as it has bolted to an early first-quarter lead in the league tables, according to preliminary numbers maintained by Thomson Financial. With more than $20 billion of ABS counted through last Wednesday, it is unlikely that the current second-place underwriter will overcome Citi's $7 billion cushion.

Through the first three months of the year, Citigroup controlled 13.2% of the market and is the only underwriter with a double-digit market share. Should Citigroup maintain the $80 billion annualized pace that it set in 1Q04, it would dwarf its market-leading 2003 volume by nearly $30 billion in additional business.

But, despite its strong lead, at this time last year Citigroup had also sold roughly $20 billion in ABS volume and had put what eventually became an insurmountable distance between itself and its competition. Throughout the year, however, the lead narrowed to less than $2 billion in what turned out to be an unexpectedly close race.

After Citigroup, there is a bottleneck, with the next four banks - Deutsche Bank Securities, Credit Suisse First Boston, Lehman Brothers and RBS Greenwich Capital - all separated by less than $1 billion and 0.06% of market share.

But, the data does show that once the merger between JPMorgan Chase and Bank One closes, Citigroup has an instant contender in ABS underwriting. Although JPMorgan will likely close the first quarter in seventh place with $11.3 billion sold and Banc One Capital Markets will rank 14th with $4 billion, the combined entity will leapfrog all the way to the second position overall, the figures show.

Citigroup's traditional strength as leading credit card issuer and underwriter could be in jeopardy as well. While Citibank N.A. has issued $3.1 billion of credit card ABS, Bank One is the second-leading issuer with $2.7 billion issued. When combined with Chase's $2 billion issued, the entity would have an almost $2 billion lead in the sector.

An ominous sign for the combined JPM/BOCM entity is that the common thread among the leading underwriters is strength in underwriting real estate ABS. Of the top five underwriters, all are among the top six mortgage ABS underwriters. RBS Greenwich's current No. 5 spot in the rankings is attributable entirely to its mortgage business.

As of mid-last week, RBS Greenwich had led roughly $12.1 billion of ABS across all sectors, nearly $11.5 billion of which was in mortgage ABS. Credit Suisse First Boston, in the No. 3 spot, and fourth-place Lehman Brothers also had high percentages of their overall ABS business in the mortgage sector. Citigroup, by contrast, had less than half of its overall business in home equity, a good-enough performance for third in the sector. Neither JPMorgan nor Banc One ranked among the top ten mortgage ABS underwriters.

The only high-ranking bank in mortgage ABS left out of the top five overall is Morgan Stanley, which ranked eighth with roughly $9.8 billion. Morgan Stanley is the fifth-leading home equity ABS underwriter. Deutsche Bank, currently second overall with $13billion, is sixth in the mortgage sector.

There are other surprises when looking at the leading underwriters so far in 2004. After being on the outside of the top ten in recent years, Merrill Lynch will look to close the quarter in sixth overall, roughly half a billion out of the top five and less than $9 billion off Citigroup's market-leading pace.

Also of note, UBS has positioned itself in the No. 10 spot and Barclays Capital is sitting at eleven. Meanwhile Morgan Stanley, last year's third-leading underwriter, slipped to the No. 8 spot through 1Q04.

Collectively, the top ten underwriters have accounted for $122 billion of the roughly $155 billion that priced in the quarter, or 79.5% of the market.

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