Corporate Bonds See Biggest Month Ever in Bridge Rankings; Merrill, Salomon Split Top Underwriter Title.Business Editors NEW YORK--(BUSINESS WIRE)--February 1, 2001 U.S. bond markets saw a huge surge in issuance during January January: see month. , with corporate bonds turning in their biggest month ever, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. data compiled by BRIDGE. The Federal Reserve's surprise 50 basis points cut in interest rates at the start of the year triggered pent up demand for new deals from both issuers and investors. The result was a record $58.4 billion of investment-grade investment-grade Of, relating to, or being a bond suitable for purchase by institutions under the prudent man rule. Investment-grade is restricted to those bonds graded BBB and above by Standard & Poor's and graded Baa3 and above by Moody's. debt issuance, a revival of the moribund moribund /mor·i·bund/ (mor´i-bund) in a dying state. mor·i·bund n. At the point of death; dying. mor junk bond junk bond, a bond that involves greater than usual risk as an investment and pays a relatively high rate of interest, typically issued by a company lacking an established earnings history or having a questionable credit history. market and notable increases in medium-term note Medium-term note (MTN) A corporate debt instrument that is continuously offered to investors over a period of time by an agent of the issuer. Investors can select from maturity bands of: 9 months to 1 year, more than 1 year to 18 months, more than 18 months to 2 years, etc. and asset-backed securities Asset-backed security A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. asset-backed security A debt security collateralized by specific assets. sales. By underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. firm, Salomon Noun 1. Salomon - American financier and American Revolutionary War patriot who helped fund the army during the American Revolution (1740?-1785) Haym Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. and Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. & Co. continued to dominate the BRIDGE rankings. Both led in three categories, as they did for all of 2000, although the specific market sectors rotated rotated turned around; pivoted. rotated tibia see rotated tibia. somewhat. Salomon was number one in investment-grade corporates, agency mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. and convertibles after placing first in investment grade, asset-backeds and bank notes in 2000. Merrill Mer·rill , James 1926-1995. American poet whose works include Divine Comedies (1976), which won a Pulitzer Prize. was leader in agency debt, medium-term notes and bank notes in January after leading in agencies, medium-term notes and convertibles for 2000. But it was the rush of issuance that distinguished the month. The total for investment-grade corporates, the highest profile and biggest market sector, was 45% more than the previous record in August 2000 and matched entire quarters of some recent years. "The Fed's January 3 rate cut was the spark spark, in electricity: see arc. (language) SPARK - An annotated subset of Ada supported by tools supplied by Praxis Critical Systems (originally by PVL). http://sparkada.com. that lit the fire," said Peter Heap In programming, it refers to a common pool of memory that is available to the program. The management of the heap is either done by the applications themselves, allocating and deallocating memory as required, or by the operating system or other system program. 1. , Chief US Credit Correspondent for BridgeNews. "But there was plenty of fuel to burn, in the form of companies looking to raise money, investors ready to jump in and perceptions that fears about the likely level of slowing in the economy were more than priced in." With interest rates low, corporations found the idea of borrowing hard to resist. Meanwhile investors had cash to invest. After corporate bonds - both investment grade and high yield - turned in weak performances in 2000, portfolio managers were ready to buy higher yielding securities in expectations of a rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective . And with corporate debt under-performing Treasuries by so much, many felt they were being more than compensated for the risks posed by a slowing economy. While investment grade reached a record, the impact on the high-yield bond High-yield bond See: Junk bond high-yield bond See junk bond. market was particularly remarkable. After activity virtually ground to a halt last year, junk bond issuance staged a stunning revival in January. More bonds were brought to market in the month than the entire fourth quarter of 2000, the BRIDGE data shows. For the month, $12.4 billion of high yield debt was sold. As a comparison, the fourth quarter of 2000 saw a total of $5.3 billion and the total for all of 2000 was only $44.4 billion.
Following are the BRIDGE Rankings for January:
INVESTMENT GRADE
2000 data
Dealer Amount ($ mln) No. Deals Rank Amount No.
------ -------------- --------- ---- ------ ---
1. Salomon SB 14759.10 25 4 1578.38 7
2. Goldman Sachs 7535.20 17 2 3398.80 6
3. Merrill Lynch 5958.40 21 3 2133.00 5
4. JPM Chase 5846.00 16 7 477.70 3
5. Banc of America 5500.10 6 10 56.90 1
Total 58415.30 71 14985.05 22
AGENCY DEBT
2000 data
Dealer Amount ($ mln) No. Deals Rank Amount No.
------ -------------- --------- ---- ------ ---
1. Merrill Lynch 4771.07 38 1 6926.24 22
2. UBS Warburg 4472.82 21 5 2259.92 6
3. Lehman Brothers 3414.79 13 6 1933.37 6
4. JPM Chase 3370.30 21 7 1640.95 35
5. Goldman Sachs 3305.09 29 2 6146.40 22
Total 38008.10 436 36049.09 347
CONVERTIBLES
2000 data
Dealer Amount ($ mln) No. Deals Rank Amount No.
------ -------------- --------- ---- ------ ---
1. Salomon SB 1142.50 3 5 387.50 2
2. Lehman Brothers 800.00 2 - - -
3. Merrill Lynch 450.00 1 2 1040.00 2
4. Banc of America 375.00 1 - - -
5. UBS Warburg 105.00 4 - - -
Total 2928.00 11 3875.20 11
HIGH YIELD
2000 data
Dealer Amount ($ mln) No. Deals Rank Amount No.
------ -------------- --------- ---- ------ ---
1. Goldman Sachs 2842.00 7 2 1433.40 4
2. Salomon SB 2735.80 10 4 273.00 1
3. Morgan Stanley DW 1973.60 7 - - -
4. CS First Boston 1325.20 5 1 2008.40 5
5. Merrill Lynch 944.50 3 - - -
Total 12382.30 27 4149.90 12
MEDIUM-TERM NOTES
2000 data
Dealer ($ mln) No. Deals Rank Amount No.
------ ------- --------- ---- ------ ---
1. Merrill Lynch 5426.73 36 2 2035.20 21
2. Salomon Smith Barney 2058.06 22 7 932.32 21
3. Lehman Brothers 1878.27 11 6 994.32 8
4. JPM Chase 1533.83 12 1 2183.92 21
5. Bear Stearns 1517.82 15 5 1350.00 16
Total 19532.83 418 13288.21 -
MEDIUM-TERM NOTE ISSUERS
2000 data
Issuer Amount ($mln) No. Deals Rank ($mln) No.
------ ------------- --------- ---- ------ ---
1. GMAC 4740.21 20 9 568.91 21
2. Merrill Lynch &
Co. Inc. 2959.80 18 26 50.00 1
3. General Elec
Cap Corp. 1750.00 2 2 1742.55 2
4. Oesterreichische
Kontroll 1250.00 1 - - -
5. Beta Fin Inc. 942.00 12 - - -
BANK NOTES
2000 data
Dealer ($ mln) No. Deals Rank Amount No.
------ ------- --------- ---- ------ ---
1. Merrill Lynch 600.00 3 4 489.00 6
2. Banc of America 500.00 5 3 899.93 11
2. McDonald Investments 500.00 2 - - -
4. First Union 325.00 3 - - -
5. Salomon Smith Barney 250.00 1 1 1312.00 7
Total 2885.00 22 4756.27 37
ASSET-BACKED SECURITIES
2000 data
Dealer Amount ($ mln) No. Deals Rank Amount No.
------ -------------- --------- ---- ------ ---
1. Lehman Brothers 3275.00 2 - - -
2. JPM Chase 2863.40 3 2 837.70 1
3. Salomon SB 2831.20 4 - - -
4. Morgan Stanley DW 2421.10 2 3 526.30 1
5. Deutsche Banc AB 2181.20 3 - - -
Total 21433.70 23 3839.90 7
ASSET-BACKED SECURITIES COLLATERAL
2000 data
Collateral Amount($mln) No. Share(%) Rank ($mln) No. Share(%)
---------- ------------ --- -------- ---- ------ --- -------
1. Auto Loans 8509.30 6 39.70 3 837.70 1 21.82
2. Credit Cards 5376.50 7 25.08 4 526.30 1 13.71
3. Home Equity 3649.50 7 17.03 2 874.60 3 22.78
4. Other 3584.00 2 16.72 6 - - -
5. Manuf. Housing 314.40 1 1.47 5 401.20 1 10.45
Total 21433.70 23 3839.90 7
AGENCY MORTGAGE-BACKED SECURITIES
2000 data
Dealer Amount ($ mln) No. Deals Rank Amount No.
------ -------------- --------- ---- ------ ---
1. Salomon SB 2647.40 1 8 656.00 4
2. JPM Chase 2000.00 1 - - -
3. UBS Warburg 1500.00 2 7 825.20 3
4. Bear Stearns 1389.60 2 3 1400.00 3
5. Lehman Brothers 758.70 2 6 933.70 2
Total 10388.10 13 10824.10 25
For full tables or more information about the BRIDGE Rankings, contact Deanna Masella at (212) 372-7346 or e-mail dmasella@bridge.com. BRIDGE Rankings are compiled as follows: Criteria common to investment-grade, agencies, high yield, convertibles, medium-term notes and bank notes: -- The tables include all dollar-denominated underwritten offerings sold in the US as public or Rule 144A deals reported to BridgeNews or Bridge Fixed Income Services. -- Amounts are based on the total sales price (face amount multiplied by offering price). The full amount is credited to the bookrunner or lead manager. For multiple leads, the total value is divided equally among joint bookrunners and joint lead managers. -- Each tranche is counted as a separate deal. -- Offerings are included in the time period in which they settle. Common criteria (Common Criteria for Information Technology Security) An international standard process for defining security objectives and for evaluating compliance with those objectives. The Common Criteria have largely replaced the Trusted Computer Security Evaluation Criteria (TCSEC), the Canadian for investment grade, agencies and high yield: -- Convertibles, preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , trust preferreds, capital securities and retail-oriented deals are excluded. -- Issues maturing in 397 days or less are excluded. Common criteria for investment grade and high yield: -- Fixed-rate medium-term notes with a face value of more than $100 million are included. All other MTNs are excluded. -- Sovereign issues are excluded. -- Passthroughs, collateral trusts and equipment trust certificates are included. Investment-grade only: -- Deals rated investment-grade by either or both of Standard & Poor's and Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. are included. High-yield only: -- Deals rated investment-grade by either Standard & Poor's or Moody's Investors Service are excluded but deals not rated by both are included. -- Units made up of a bond and warrant are included; other units are excluded. Agencies only: -- For FHLB FHLB Federal Home Loan Bank Tap issues, the actual amounts underwritten are credited to managers. Convertibles only: -- Bonds are included that convert into the issuer's or another company's stock or the cash equivalent; bonds that convert into other bonds are excluded. -- Units made up of a bond and stock are included; units made up of a bond and warrants are excluded. -- Preferred issues are included using the same criteria as for bonds. -- Issues maturing in 397 days or less are excluded. Medium-term notes only: -- Sovereign issues and agencies are excluded. Bank notes only: -- Notes with a maturity of less than 1 year are excluded (threshold is 360 days or more). Asset-backed and agency mortgage-backed securities only: -- The tables include all dollar-denominated underwritten offerings sold in the US as public deals reported to BridgeNews or Bridge Fixed Income Services. -- Offerings are included in the time period in which they settle. -- Deal sizes are face amount. The full amount is credited to the bookrunner bookrunner See lead underwriter. or lead manager. For multiple leads, the total value is divided equally among joint bookrunners and joint lead managers. -- All tranches Tranches A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". of a deal are counted as a single deal. Asset-backed securities only: -- Privately placed and unoffered tranches of public deals are included. -- Asset-backeds excludes A-quality, first-lien, owner-occupied, 1-4 family, non-home-equity residential mortgages. -- Commercial mortgage-backeds and equipment trust certificates are excluded. Agency mortgage-backed securities only: -- Notional no·tion·al adj. 1. Of, containing, or being a notion; mental or imaginary. 2. Speculative or theoretical. 3. tranches are count towards deal size only in purely notional deals. 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