As a testament to growing demand from investors for U.S. CDO product, total issuance in the first half of this year totaled $60.4 billion - nearly double the $35.5 billion under management in the first half of last year, according to data maintained by Thomson Financial. And Merrill Lynch & Co. held onto the top spot among CDO managers, bringing $12.7 billion to the market and maintaining more than one-fifth of the market with a 21% share. In the first half of last year, Merrill had placed $5.7 billion, good for a 16% market share.
Aside from access to cheap capital, among the reasons CDO products have become more popular among structured finance investors is the products' ability to separate classes of risk, which, under a tight spread environment.Citigroup Global Markets climbed to the number two spot, with $8.5 billion in proceeds and a 14% market share, compared to a third place ranking last year achieved by underwriting $3.5 billion in proceeds and a 9.8% market share. Lehman Brothers rose significantly through the ranks, moving up to the number three spot from number 11 in the same period last year. Lehman led $4.3 billion, good for a 7.1% market share, up from the $1.5 billion in proceeds and 3.5% market share, during the first half of last year.