• U.S. market convertibles issuance totals $18.98 billion year to date
• March convertibles issuance totals $3.67 billion in 15 deals
By Rebecca Melvin
New York, March 31 - Banc of America was the top U.S. market convertible underwriter for the first three months of 2008, with $7.671 billion in six deals, accounting for 40.41% of total issuance, according to data compiled by Prospect News.
Citigroup was the number-two U.S. market convertible underwriter, with seven deals totaling $3.711 billion, or 19.55% of the total, and Goldman Sachs was at number three, running the books on five deals totaling $1.743 billion, or 9.18% of the total.
New issuance for the first quarter of 2008 stands at $18.982 billion, which is down about 30% from the $27.285 billion for the first quarter of 2007.
The number of new deals dropped 45% to 36 new deals for the 2008 first quarter, compared to 65 deals for the same period of 2007.
The slump was evident in February when a slight $1.99 billion in new issuance was priced; at that time some viewed it as something of an anomaly, related to a slump in equity market performance and widening credit spreads, sources said.
March new issuance gained compared to February but was less than one-quarter of the amount tallied for the same month a year ago.
There was $3.669 billion of new issuance in 15 deals in March, compared to $16.056 billion in 36 deals priced in March 2007, according to Prospect News data.
J.P. Morgan Securities Inc. replaced Merrill Lynch & Co. as the number-one ranking underwriter for March, pricing $892 million in new issuance in seven deals, representing a 24.3% share of the total.
"The problem with March is that there was a lack of megadeals," a New York-based sellside analyst said. "Three and a half billion isn't so bad. We saw 15 deals, which is a bunch, but they were all relatively small."
"The biggest issue was Suntech, followed by CETV. If just one of those deals was really large, it would have made all the difference," the analyst said.
Suntech Power Holdings Co. Ltd. priced an upsized $500 million of five-year convertibles on March 11. There was also a greenshoe of $75 million. Originally, the deal was expected to be $425 million with a $75 million shoe.
Central European Media Enterprises Ltd., or CETV, priced $425 million of five-year convertible bonds March 5. The deal had an over-allotment option of up to $50 million
Another sellsider, based in Connecticut, pointed out that the level of new issuance was no surprise given where the equities markets are. "Don't forget; it's not just market conditions, but companies have always liked to time their offerings when their stocks are at what are perceived to be rich levels. I don't think many companies think their stocks are fairly valued these days," the trader said.
The S&P 500 was down just over 1% for March, but it's down 10.4% for the quarter.
Year to date
2007 Comparables
| Underwriter | Amount | No. | Share | Rank | Amount | No. | Share
|
| 1 | Banc of America | 7.671 | 6 | 40.41% | 8 | 1.242 | 9 | 4.55%
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| 2 | Citigroup | 3.711 | 7 | 19.55% | 4 | 3.108 | 12 | 11.39%
|
| 3 | Goldman Sachs | 1.743 | 5 | 9.18% | 5 | 1.910 | 10 | 7.00%
|
| 4 | JPMorgan | 1.205 | 9 | 6.35% | 1 | 6.065 | 19 | 22.23%
|
| 5 | Merrill Lynch | 1.050 | 8 | 5.53% | 3 | 3.854 | 13 | 14.13%
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| 6 | UBS | 1.025 | 7 | 5.40% | 7 | 1.411 | 8 | 5.17%
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| 7 | Credit Suisse | 0.803 | 6 | 4.23% | 6 | 1.876 | 8 | 6.87%
|
| 8 | Deutsche Bank | 0.710 | 5 | 3.74% | 2 | 4.175 | 7 | 15.30%
|
| 9 | Morgan Stanley | 0.250 | 2 | 1.32% | 9 | 1.193 | 5 | 4.37%
|
| 10 | ABN | 0.192 | 1 | 1.01% | 13 | 0.167 | 1 | 0.61%
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| Total | 18.982 | 36 | 27.285 | 65 |
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| Average size: | 0.527 | 0.420 |
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| March
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| | | | | 2007 Comparables
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| Underwriter | Amount | No. | Share | Rank | Amount | No. | Share
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| 1 | JPMorgan | 0.892 | 7 | 24.33% | 1 | 3.467 | 9 | 21.60%
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| 2 | Deutsche Bank | 0.627 | 4 | 17.10% | 5 | 1.122 | 5 | 6.99%
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| 3 | Banc of America | 0.485 | 3 | 13.22% | 7 | 0.973 | 6 | 6.06%
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| 4 | UBS | 0.329 | 3 | 8.97% | 8 | 0.890 | 4 | 5.54%
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| 5 | Goldman Sachs | 0.307 | 2 | 8.36% | 6 | 1.095 | 5 | 6.82%
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| 6 | Credit Suisse | 0.253 | 2 | 6.88% | 4 | 1.425 | 4 | 8.88%
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| 7 | Citigroup | 0.219 | 3 | 5.97% | 3 | 2.572 | 10 | 16.02%
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| 8 | ABN | 0.192 | 1 | 5.22% |
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| 9 | Lehman | 0.158 | 1 | 4.32% | 11 | 0.270 | 2 | 1.68%
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| 10 | Merrill Lynch | 0.133 | 2 | 3.63% | 2 | 2.718 | 8 | 16.93%
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| Total | 3.669 | 15 | 16.056 | 36 |
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| Average size: | 0.245 | 0.446 |
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| Prospect News Convertibles Underwriter Rankings
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Criteria
• The tables include all underwritten dollar-denominated offerings sold in the United States as public or Rule 144A deals reported to Prospect News.
• Offerings are included in the time period in which they price.
• Amounts are based on the total sales price (face amount multiplied by the offering price). The full amount is credited to the bookrunner (or lead manager if no bookrunners). For multiple bookrunners (or lead managers), the total value is divided equally among all the firms.
• Each tranche is counted as a separate deal.
• 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.
• Structured products issued by an investment bank and exchangeables for or linked to another company's stock 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.
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