Salomon Smith Barney, which dominated the ABS underwriting market from 1999 through 2001, is off to a hot start in 2003, with almost $20 billion of ABS supply sold in the first quarter, according to preliminary numbers from Thomson Financial. Salomon has captured roughly 18% of the market so far, landing mandates on transactions from Sallie Mae, Toyota Motor Credit and, of course Citibank N.A., along with numerous global MBS issues.

Being the captive underwriter for Citibank has its benefits, especially in light of Citi's increased securitization volume. Thus far in the year, Citibank has priced $5.9 billion of credit card ABS, accounting for 32.6% of first-quarter credit card ABS supply. This is up sharply from the 14% of sector volume that Citibank averaged per quarter last year.

While Salomon has a firm grip on the top spot, second through fourth places are in tight contention. Just under $1 billion divides 2002 champ JPMorgan Securities from its closest competitor, Deutsche Bank Securities; Morgan Stanley trails Deutsche Bank by pocket change.

On a market-share basis, underwriters No. 2 through 4 each have roughly 10% of the primary market in the first quarter.

Credit Suisse First Boston was unable to keep pace with its 1Q02 numbers, with $7.7 billion of ABS sold in the first three months, versus the roughly $10.7 billion over the same period last year. CSFB did, however, have high-profile mandates, such as Ford Motor Credit, GMAC and Sallie Mae. The books, however, were often split two - or sometimes three - ways.

Additionally, in a blow to its issuance potential in the remainder of the year, the firm's CDO chief, Chris Ricciardi, recently defected to rival bank Merrill Lynch. CDOs have historically been a dominant sector for CSFB, which has underwritten the most CDO product the past three years.

Illustrating the close competition, numbers six through 10 on the list are separated by just $2 billion. In a surprising accomplishment, RBS Greenwich Capital is taking the No. 6 spot, with $6.5 billion of ABS sold, all but $300 million in real-estate ABS. Greenwich is claiming 6% of the total market (11.5% of real estate ABS). Banc of America Securities has underwritten $6 billion and is one of the few banks with a significant presence in all sectors of the market.

Lehman Brothers, at $5.6 billion, Banc One Capital Markets, at $4.8 billion and Bear Stearns at $4.3 billion sold round out the top 10. Each of the firms has between 4% and 5% of the total ABS market.

The top 10 underwriters together control 81% of the market, with 56% of the entire market concentrated in the top five.

Copyright 2003 Thomson Media Inc. All Rights Reserved.


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