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Dealers Jostle For High-Yield Standings With 11th-Hour Tactics

Credit Suisse First Boston, Citigroup, J.P. Morgan and Banc of America Securities are vying for top spots in this year's high-yield league tables.

Credit Suisse First Boston, Citigroup, J.P. Morgan and Banc of America Securities are vying for top spots in this year's high-yield league tables. The closer-than-normal standings are causing some firms to slash fees and put up more of their own capital to finish deals in the final weeks of the year, according to fixed-income market participants.

"We're doing deals basically without fees... banks are willing to lose money on deals in order to get them done," said a high-yield banker at one of the firms, which are the top four. "Investors should look with wary eyes at deals announced this week. It's likely the underwriter has bought the deal," he added, declining to highlight specific deals.

CSFB's dominance in high yield may be over. The firm has held the number one slot in the U.S high-yield league tables run by Thomson Financial since 1992, but Citi looks likely to take over the top spot this year. It had sold $19.98 billion versus CSFB's $18.28 billion as BW went to press. Last year, CSFB sold $5 billion more than second-place Citi. Meanwhile, J.P. Morgan and BofA are in a tight race for third place: Morgan has sold $15.37 billion and BofA $15.29 billion.

Tim O'Hara, global head of high-yield capital at CSFB, said the firm is competing fiercely for the top spot. "It's a highly competitive business and people resort to lots of ways to convince clients to do business with them," he said, declining to comment specifically on whether firms are cutting fees and putting paper into their own books.

Calls to Citi were referred to Danielle Romero, spokeswoman, who did not comment by press time.

John Rote, head of high-yield syndicate at BofA, predicts his shop will take the fourth slot, up from last year's sixth, based on J.P. Morgan's pipeline. He also declined to say whether aggressive 11th-hour tactics are being used.

Jim Casey, managing director and head of high-yield capital markets at J.P. Morgan, did not return calls.

Several investors said a slew of so-called bought deals, or ones the underwriters took large chunks of in a bid to move up the league tables, hit the secondary market last week.

The Goodman Global Holdings transaction, led by J.P. Morgan and CSFB, turned a few heads. One investor highlighted the triple-C, 7 7/8s of '12 as being an example of such a deal because it was stuck near par after breaking in the middle of the week. Most new deals with widespread distribution trade up.

Bankers and investors note Citi's ascent to the number one slot may be more than a flash in the pan because it comes amid restructuring at CSFB. The Swiss-owned firm recently said leveraged finance luminaries including Doug Ostrover and Bennett Goodman will leave the firm as part of a spin off of its hedge funds and while Goodman has not been working on the dealer side for some time, these announcements are perceived as the end of an era.

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