The U.S. RMBS manager league tables played out like a game of musical chairs in the first half of 2007. Lehman Brothers took the lead with a 10.7% share of the market, up from its position at number three in the first half of 2006, according to data from Thomson Financial. The bank slid into first place with $59.56 billion in agency and non-agency RMBS in 62 issues.
While Bear Stearns led the second quarter with $31.94 billion in volume and an 11% share of the market, the bank clocked in at number two for the first half of the year, holding onto a 9.5% market share with $52.9 billion in volume. JPMorgan Securities rivaled Bear with $52.21 billion in volume, rising three notches to take third place from its position at sixth in the first half of 2006.
Morgan Stanley and Bank of America Securities also rose in the first half, to fifth and sixth from 11th and ninth places, respectively, while another strong leap came from Washington Mutual, which moved into seventh from 14th in the first half of 2006.
On the flipside, Royal Bank of Scotland dropped to eighth from its number-two spot, while Goldman Sachs fell to 11th from fifth.
Total RMBS industry volume was slightly elevated in the first half of 2007, at $557 billion from $542.7 billion in the first half of 2006, and up to $290.1 billion in the second quarter of 2007 from $248 billion in the first quarter. One reason for the increase in RMBS supply: ARM resets that coincided with favorable interest rates earlier this year. However, expectations aren't so high for the second half of the year, with higher interest rates and a steeper yield curve that should encourage more ARM borrowing.
Home price appreciation also continues to slow, which market participants said should affect volume. The HPA readings "continue to paint a relatively bleak picture for the housing market," according to Citigroup Global Markets. Since the middle of 2004, the HPA readings have declined significantly, with Case-Shiller's HPA numbers dropping a notable 23 percentage points, the investment bank said.
On the issuer side of the league tables, Federal Home Loan Mortgage (FHLM) and Fannie Mae retained their first and second spots, respectively. While FHLM had a 13.2% share of the market with 86 issues, Fannie Mae had a 10.3% share with 83 issues. JPMorgan rose three notches to take third place from its position at sixth in the first half of 2006. The bank held on to a 7.3% market share with only 38 issues, a dramatic difference from the top two issuers on the table.
Other issuer shifts included Washington Mutual's rise to fourth from 10th in the first half of 2006, with a market share of 6.5%, and Countrywide Credit Industries' slight drop to fifth place, with 6.2% of the market, from third in 2006.
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