Don't Like Change? You'll Love the League Tables
October 1, 2009
When Jean-Baptiste Alphonse Karr said, “The more things change, the more they remain the same,” he likely wasn’t referring the leveraged finance league tables. But a year after an historic transformation in U.S. investment banking, Karr’s words apply quite well to the ranking of underwriters in our markets.
What we’ve had for the last several years in U.S. leveraged loans is a market dominated by JPMorgan and Bank of America, each with shares upwards of 20%, or more.
Unsurprisingly, their 2008 acquisitions of troubled competitors Bear Stearns and Merrill Lynch hasn’t changed that scenario much, beyond making them stronger. The two behemoths still sit atop the list, BofA at number one with 20.6% of the market and JPMorgan at number two with 16.3%, according to Thomson Reuters.
Most of the rest of the top 10 has seen minimal change as well (other than the banks that have disappeared.) However, where an acquisition can help, it appears, is getting to number three. Which is where Wells Fargo has landed, with a 13% market share, following its acquisition of Wachovia.
Wachovia was actually stronger that Wells Fargo in leveraged loans, according to previous league tables. At this time last year, it ranked number four with a 5.6% share of the market, a level it had more or less hung out at for several years. During the first three quarters of 2008, Wachovia took part in 123 leveraged loan deals for total volume of $24.6 billion.
Well Fargo, on the other hand, only fist cracked the top 10 in 2008, with 64 deals totaling $11.5 billion. In previous years, it ranked somewhere in the teens.
The blockbuster year so far on the junk bond market hasn’t meant much change on the U.S. high yield league tables either, with JPMorgan and BofA securely at the top with roughly 17% of the market each.
The news on the junk bond market is, of course, volume—$98.4 billion worth of deals year to date. And Europe is slowly coming to life again. After a dormant 2008 when nearly nothing priced, euro denominated high yield totaled $15.8 billion.
And while we’re all aware of the dive in volume the U.S. leveraged loan market took this year (to $161.4 billion for the first three quarters from $394.9 billion for the same period in 2008 if you’d like a numeric representation of the pain), it has been picking up. Something market participants expect to continue, Richard Kellerhals reports this week (see story, LFN.com Features).
And that’s the sort of change the market can really use.
For these latest league tables, 2008 volumes for merged firms (i.e. Wells Fargo/Wachovia) have been combined.