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.
These top three issuers dominated 42.2% of the market, compared with the 36.1% hold on the market by last year's top three - Citigroup, Merrill, and UBS.
Despite having sold the exact amount of CDO product - $3.7 billion - in the first half of 2005 as it did over the same period last year, UBS fell from second place to fifth place, with a 6.1% market share, versus last year, when that amount earned it a 10.3% market share. Morgan Stanley, meanwhile, rose to rank fourth, from seventh place last year. Morgan Stanley underwrote $4.1 billion of primary CDO issuance, achieving a 6.7% market share, compared with $1.9 billion and 5.3% market share during the same time period last year.
Rounding out the top 10 managers in the first half of this year, ending June 29, were Wachovia Securities, Goldman Sachs, IXIS Capital Markets, which was not ranked by Thomson last year, and Credit Suisse First Boston.
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