Prospects for CDO issuance is slim. As JPMorgan Securities analysts said in a recent report, "supply has yet to come into the market, with many prospective sellers waiting for market stability."
This sentiment is reflected in the CDO manager rankings compiled by Thomson Reuters for the period covering the first quarter to third quarter 2008. Industry totals for the period only reached $20.1 billion, a fraction of the $258.3 billion the market saw over the same time period last year.
Topping the rankings is Morgan Stanley, which had $5.3 billion proceeds and a lion's share of the market at 26.4%. The top bank placed sixth last year with $14.8 billion in proceeds and a 5.7% market share.
A not-so-close second is JPMorgan Securities, which had $3.7 billion in proceeds (18.5% market share). For the first three quarters of 2007, JPMorgan was No. 3 with $29.9 billion in proceeds (11.6% market share).
Citigroup Global Markets came in third while Banc of America Securities placed fourth. Citi, which was No. 1 last year, booked $3.2 billion worth of business, equivalent to a 16.2% market share. BofA, which was seventh a year earlier, had $2.1 billion in proceeds and a 10.6% market share.
Maintaining its rank from last year, the fifth place Deutsche Bank Securities had $1.4 billion in proceeds (7.3% market share).
Lehman Brothers, Wachovia Securities, Barclays Capital, Merrill Lynch, and UBS round out the top 10 for CDO manager rankings for the first three quarters of 2008.
It seems like there's no end in sight for the dearth in CDO business.
"The market remains fragile and wary of whether current policy initiatives are enough," JPMorgan Securities analysts said. "A TARP-type solution is positive in putting a floor under mortgage-related prices (helping CLOs), but the darkening economic picture is more cause for concern."
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