Not Much On The Table(s) In Terms Of Issuance

--By Olivia Thetgyi

There was not much to be drawn from the third quarter league tables released earlier this month, unless you count sighs and shrugs. In the current market, it's hard to find anything worth looking at when it comes to deal issuance. "We're in a post-apocalyptic scenario," one investor said. "[The league tables] don't represent real business. They're just representing disparate situations, not the value of the business that's being done or the quality of the business." A former non-agency MBS trading head at a major bank agreed. "I don't think issuers award deals based on the league tables anymore. More likely it's if the broker-dealer can finance the issuer," he said.

What the tables do show is just how badly the markets have been decimated. For example, in ABS, global issuance was nearly halved to $29.96 billion from $61.3 billion the previous quarter. In the U.S., 24 deals worth $16.06 billion in deals got done, compared with 66 deals worth $52.65 billion. "The new issue market is so small [looking at league tables] is not worth the effort," said one trader on a bank's proprietary trading desk. "'New issue' now is different from 'new issue' from the past ­ sometimes deals are coming out just because it took the company six months to get their arms around a new deal."

In a market where investors are increasingly looking for proof that transactions will perform, they are more and more turning to buying in the secondary market where they can see months of the deals' performance, he added.

One bright spot in ABS, however, was Europe, where issuance actually rose from the previous quarter to seven deals valued at $6 billion, up from four deals worth only $1.06 billion in the second quarter.

This time a full complement of dealers participated, a reverse of the situation last quarter where Deutsche Bank, UBS and VTB were the only underwriters. Globally, the top seeds ­ Royal Bank of Scotland, JPMorgan and Credit Suisse ­ were also the most active underwriters in the U.S., with 12, 10 and five deals apiece, respectively. Globally, CDO issuance slowed to $9.35 billion from $13.17 billion in the second quarter.

"It's hard to see if there will be any investor appetite," the investor said. "I think the only way we'd get [CDOs] done now is one equity investor and one senior investor coming together to ramp a portfolio they both agree with. The broadly syndicated deal is gone for the foreseeable future."

The U.S. and Europe also switched places in terms of activity. This quarter the U.S. had 14 deals for a total of $6.43 billion, up from $5.58 billion in the second quarter. In Europe, CDO production slowed down dramatically to seven deals tallying up to $2.58 billion from 12 deals adding up to $6.86 billion.

Of course, the situation is even more dramatic when compared with figures from the same quarter a year ago, when globally new deals were almost $52 billion, the U.S. had $40.1 billion in deals and Europe had $10.68 billion. Goldman Sachs moved up the league tables to the number one spot globally and in the U.S. The bank closed on 10 deals worth $3.99 billion for a 42.69% market share of what around the world was only a $9.35 billion market. The bank did not do any deals in Europe. That contrasts sharply with the situation just one quarter earlier, where Goldman was tops of the CDO bookrunning list by virtue of having the single largest CDO and did not do any deals in the U.S.