Merrill Lynch ran away with the lead in the U.S. CDO league tables in 2004, according to data maintained by Thomson Financial, more than tripling its total underwriting volume from the previous year. With more than $15 billion of CDO product sold last year, Merrill controlled 17.2% of the market, up from the $4.8 billion and a 9.2% market share the underwriter sold in 2003, good for fourth place.

Merrill, which maintained a lead throughout the year, finished the 2004 $5.7 billion ahead of its closest rival, Wachovia Securities, which placed $9.3 billion of CDOs in investor's hands. After a slim $1.4 billion lead in 1Q04, Merrill's business increased significantly after Managing Director Christopher Ricciardi joined the firm in April.

"The strategy has been to be a high-volume underwriter, with a focus on areas that are very popular," said Ricciardi. "ABS CDOs have been very popular with investors this year."

Despite Merrill's commanding lead, competition in the CDO underwriting market was fairly intense, with the second through fifth place managers ending last year separated by roughly $2 billion and places three through six all within $500 million of each other.

After pricing up the $2.5 billion Duke Funding High Grade CDO I transaction just before year-end, Wachovia moved into second place, having priced $9.3 billion last year, good for 10.7% of the primary market.

UBS ended the year with $7.2 billion sold, or 8.2% of the market, slightly ahead of Credit Suisse First Boston, which sold $7.1 billion of CDOs last year, good for 8.1% of the market. Citigroup Global Markets closed out the top five, having sold $7 billion, controlling 8% of the market. Of note, UBS jumped to third from its thirteenth overall ranking in 2003, when it sold $2.2 billion.

Overall, thanks to the aforementioned popularity of ABS CDOs, the primary market saw more than $87 billion in 2004, a 65.8% increase from the $53 billion seen in 2003.

Copyright 2005 Thomson Media Inc. All Rights Reserved.

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