Like a well-oiled machine, the US asset-backed securities CDO market in 2005 grew by more than 66% percent, fed in large part by a robust housing market, hungry investors - and oiled by a benevolent Federal Reserve, historically speaking. Total issuance in the sector reached a record 359 deals totaling $154.5 billion, compared with 2004's 251 deals and $92.8 billion of issuance, according to data maintained by Thomson Financial.

The order of ABS CDO underwriters shuffled in 2005, a year of tight, difficult-to-source collateral and heightened concern in regard to ballooning exposure to the residential mortgage market. But demand among investors was certainly high - three of the top five underwriters last year were able to not only meet it, but also able to maintain enough market share to keep from slipping below those ranks in 2005.

In fact, the top two underwriters were able to hold their spots and bring an additional $10 billion apiece to the market in 2005 - increases of 66% and 122%, respectively.

Merrill Lynch & Co. defended its number one rank as the top bookrunner - maintaining a roughly $6 billion window between itself and the nearest competitor for the second year in a row. Merrill sold 38 deals to the market totaling $25 billion, garnering a 16.3% market share as it did in 2004, through the sale of 33 deals worth $15.1 billion.

While gaining on Merrill, Wachovia Corp. remained in its number two spot in 2005 for the second year. Wachovia earned a 12.9% market share through the sale of 36 deals totaling some $20 billion, compared with a 9.7% market share last year, with 26 deals worth $9 billion.

Mixing it up, Citigroup rose to the number three spot from fifth place in 2004. Citigroup earned a 12% market share through 39 deals totaling $18.5 billion, compared with only a 7.7% market share last year, achieved by selling 28 deals worth $7.2 billion.

Morgan Stanley climbed three spots to garner a fourth place position. The investment bank sold 40 deals totaling $11.2 billion and a 7.2% market share. Last year, Morgan Stanley's identical 7.2% market share, earned through 19 deals totaling $6.7 billion, only took it to seventh place.

Rounding out the top five, Bear Stearns & Co. underwrote 31 deals totaling $10.6 billion - a sizable increase from 2004's ninth place landing, garnered through 21 deals worth $5.9 billion.

UBS constituted the biggest drop from its third place spot among ABS CDO underwriters in 2004. The investment bank, which has also fallen behind from its RMBS underwriting glory days, fell to 10th place in 2005.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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