HY Market Fell 33%, DLJ Increased

Donaldson Lufkin & Jenrette took a bigger piece of a shrinking high yield market for the first nine months of the year.

DLJ grabbed top honors for the year-to-date numbers on high yield underwriting, with 18.7% of the market, an increase from its top slot of 14.8% last year during the same time period, according to preliminary statistics from Thomson Financial Securities Co. Final numbers will appear next week.

Although in terms of overall proceeds, DLJ tapered off to $14.8 billion from $18.1 billion in the nine-month period. That's because the overall high yield market fell 33% to $78.7 billion from its record of $117.8 billion last year.

DLJ is no stranger to the peak of the high yield mountain - it was the biggest underwriter for all of 1998, with 14.7% of the market.

Steve Rattner, managing director of high yield capital markets at DLJ, said there were three recent mammoth deals that helped push the firm's numbers so high: PSINet, Allied Waste and UPC.

PSINet did a $1.2 billion transaction in the high yield market while European cable company UPC sold $2 billion in junk bonds and Allied Waste sold $1.5 billion of high yield debt.

It was not just the big deals that helped the numbers, Rattner said, but also the number of offerings. However, DLJ came in second on those criteria with 56 deals in the nine months. Morgan Stanley Dean Witter had 88.

Rounding out the top five underwriters were: Salomon Smith Barney, with a 13.5% market share and $10.7 billion in proceeds; Chase Securities with a 10.4% market share and $8.3 billion in proceeds; Morgan Stanley Dean Witter with a market share of 9.8% and proceeds of $7.8 billion; and Goldman Sachs, which had a share of 8.4% and $6.7 billion in proceeds.

One investor at a large mutual fund said that while most of the sell-side players look closely at the league tables, many of the buy-siders take other, more qualitative aspects seriously as well.

Instead of the big name and the big market share, he looks closer at the level of support the manager will give in terms of research and liquidity. And furthermore, he said, the issuers are not looking at sheer size either but rather things like execution capabilities and the ability to bring the deal to a wide subscriber base and, of course, low costs.