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U.S. RMBS issuance drops, jumbling league table standings

Hit by rising interest rates, slowing home price appreciation and tightening underwriting standards, U.S. RMBS volume fell 5% to $248 billion in 1Q07 from $261 billion a year earlier, according to data for both agency and non-agency issuance maintained by Thomson Financial.

The quarter was also marked by a shakeup in league table standings, as some underwriters pulled back involvement in the mortgage market - leaving others to pick up the slack.

Case in point: JPMorgan Chase rose to a first-place finish and an 11.8% market share during the quarter, underwriting $29.2 billion through 28 RMBS deals, compared with 34 deals totaling $17.1 billion, resulting in a sixth-place finish and a 6.5% market share a year earlier.

The substantial increase in deal flow is a result of the firm's investment in the securities business as well as its "coordination and partnership" with Chase Home Lending, said Bill King, co-head of securitized products at JPMorgan. "Frankly, it is indicative of the level of collaboration happening all over the firm," King said.

Chase Home Lending saw an uptick in business in the first quarter in both prime and subprime operations, as borrowers - and mortgage brokers - chose to do business with more well-established companies amid a deluge of subprime company closures, Chase executives have said.

Lehman Brothers and Bear Stearns maintained their positions at second and third place, respectively, in the year-over-year rankings. Lehman managed 29 deals totaling $24.8 billion and a 10% market share during the first quarter, compared with 29 deals totaling $27.1 billion and a 10.4% market share a year earlier. Meanwhile, Bear Stearns managed 24 deals totaling $19.1 billion and a 7.7% market share, compared with 38 deals totaling $25.4 billion and a higher 9.7% market share last year.

Washington Mutual shot through the ranks, rising eight spots to place fourth among RMBS underwriters in the first quarter. The bank managed 15 deals totaling $18.9 billion and garnered a 7.6% market share. Last year during the first quarter, WaMu managed 14 deals totaling $11.5 billion and a 4.4% market share.

Rounding out the top five was another bank that bulked up its RMBS underwriting during the quarter. Citigroup managed 30 deals equivalent to $17.6 billion and a 7.1% market share, up from the 20 deals it managed a year earlier that totaled $11 billion and and gave it a 13th place finish and a 4.2% market share.

Perhaps the most dramatic among those that pulled back RMBS underwriting volume during the quarter, Royal Bank of Scotland Group fell to sixth place from first place a year earlier. RBS managed 22 deals totaling $17 billion and a 6.9% market share, compared with last year's total dollar volume of $31 billion, achieved through 40 deals that earned it an 11.9% market share.

In another notable decline, Goldman Sachs fell to eighth place in the first quarter of this year from fourth place in the first quarter of 2006. Goldman acted as underwriter on 17 deals equivalent to $13.8 billion in proceeds and a 5.6% market share. Last year in the first quarter, Goldman sold 33 deals totaling $19.5 billion for a 7.5% market share.

(c) 2007 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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