Late charges push Citigroup, Morgan Stanley to lead 2006 league tables

• Convertibles issuance jumps 83.4% to reach $70.6 billion in 2006

• Convertibles issuance (including synthetics) totals $81.46 billion

• Merrill Lynch biggest gainer of the year

By Kenneth Lim

Boston, Dec. 29 - Citigroup remained atop the convertible league tables after a slow start in 2006, while a late charge carried Morgan Stanley past Merrill Lynch for the second spot as overall convertible issuance hit a three-year high.

For 2006, a total of 156 non-synthetic convertible deals raised $70.6 billion of proceeds in 2006, an 83.4% increase in terms of proceeds from 2005. About $24.42 billion of that came in the fourth quarter. Synthetic deals brought the year's total to 995 offerings and $81.44 billion in proceeds, of which $26.77 billion was from the fourth quarter.

Citigroup's non-synthetic convertible deals raised $12.08 billion in 2006, or 17.1% of the total. The investment bank, which ranked third in 2005, only rose to the top of the tables in September after it emerged as the sole bookrunner for U.S. Bancorp's $2.5 billion offering.

Morgan Stanley's staff must have camped out in their offices in December. The bank brought $3.9 billion from eight deals in December, including a $1 billion offering by PNC Financial Services Group Inc., to lead the month in proceeds and number of deals. December helped Morgan Stanley overtake Merrill Lynch and clinch second place. Morgan Stanley, which ranked fifth in 2005, helped raise $9.9 billion of proceeds in 2006, or 14% of the total.

Citigroup and Morgan Stanley also held onto their ranks when investment bank exchangeables were counted. Citigroup's $13.73 billion accounted for 16.9% of the overall total, while Morgan Stanley's $12.99 billion represented 16% of the pie.

Goldman Sachs, the top underwriter in 2005, slid to fourth place, with $6.45 billion worth of non-synthetic deals. Although Merrill Lynch lost the top spot after leading the league tables for the first eight months of 2006, it was the biggest gainer of the year, moving up to third place with $9.25 billion of non-synthetic deals, from eighth place in 2005.

The Prospect News figures cover dollar-denominated deals offered in the United States as registered transactions or under Rule 144A. They exclude deals issued by investment banks linked to a single stock - except where noted.

2006, excluding investment bank exchangeables

2005 Comparables

	Underwriter	Amount	No.	Share	Rank	Amount	No.	Share
1	Citigroup	12.083	31	17.12%	3	4.484	20	11.65%
2	Morgan Stanley	9.895	29	14.02%	5	3.679	22	9.56%
3	Merrill Lynch	9.248	42	13.10%	8	2.962	20	7.69%
4	Goldman Sachs	6.446	21	9.13%	1	6.380	19	16.57%
5	Banc of America	6.371	35	9.03%	7	3.157	19	8.20%
6	Lehman	6.256	18	8.86%	2	4.681	16	12.16%
7	JPMorgan	5.344	31	7.57%	4	4.290	23	11.14%
8	UBS	4.691	23	6.64%	10	1.585	15	4.12%
9	Deutsche Bank	3.066	15	4.34%	6	3.263	12	8.47%
10	Credit Suisse	2.470	16	3.50%	9	1.826	12	4.74%
	Total	70.596	156	38.503	121
	Average size:	0.453	0.318
2006, including investment bank exchangeables
					2005 Comparables
	Underwriter	Amount	No.	Share	Rank	Amount	No.	Share
1	Citigroup	13.734	63	16.86%	2	6.431	50	14.61%
2	Morgan Stanley	12.994	116	15.95%	4	4.651	52	10.56%
3	Merrill Lynch	9.304	46	11.42%	7	3.242	23	7.36%
4	Lehman	7.638	51	9.38%	3	5.431	40	12.34%
5	Goldman Sachs	7.110	43	8.73%	1	7.103	55	16.13%
6	UBS	7.041	25	8.64%	10	1.585	15	3.60%
7	Banc of America	6.371	35	7.82%	8	3.157	19	7.17%
8	JPMorgan	5.404	89	6.63%	5	4.290	23	9.75%
9	Deutsche Bank	3.090	28	3.79%	6	3.267	16	7.42%
10	Credit Suisse	2.580	97	3.17%	9	1.985	18	4.51%
	Total	81.455	1015	44.026	472
	Average size:	0.080	0.093
Q4, excluding investment bank exchangeables
					2005 Comparables
	Underwriter	Amount	No.	Share	Rank	Amount	No.	Share
1	Morgan Stanley	4.300	11	17.61%	5	1.193	7	7.43%
2	Citigroup	3.521	8	14.41%	3	2.217	9	13.80%
3	Lehman	2.793	9	11.44%	8	0.785	4	4.89%
4	Goldman Sachs	2.296	6	9.40%	1	4.001	6	24.90%
5	Banc of America	2.287	9	9.37%	6	1.139	5	7.09%
6	Merrill Lynch	1.971	12	8.07%	7	0.883	6	5.50%
7	Deutsche Bank	1.484	7	6.08%	4	1.253	3	7.80%
8	JPMorgan	1.431	10	5.86%	2	2.715	9	16.90%
9	UBS	1.157	8	4.74%	9	0.612	5	3.81%
10	Credit Suisse	0.955	3	3.91%	12	0.290	3	1.81%
	Total	24.424	55	16.067	37
	Average size:	0.444	0.434
Q4, including investment bank exchangeables
					2005 Comparables
	Underwriter	Amount	No.	Share	Rank	Amount	No.	Share
1	Morgan Stanley	5.168	32	19.29%	4	1.384	15	8.14%
2	Citigroup	4.123	15	15.39%	3	2.446	16	14.39%
3	Lehman	3.005	16	11.22%	7	0.932	13	5.48%
4	Goldman Sachs	2.364	8	8.83%	1	3.987	10	23.46%
5	Banc of America	2.287	9	8.54%	6	1.139	5	6.70%
6	Merrill Lynch	1.972	13	7.36%	8	0.883	6	5.20%
7	Deutsche Bank	1.491	10	5.57%	5	1.256	6	7.39%
8	JPMorgan	1.465	48	5.47%	2	2.715	9	15.98%
9	UBS	1.157	8	4.32%	9	0.612	5	3.60%
10	Credit Suisse	1.007	29	3.76%	11	0.444	4	2.61%
	Total	26.788	382	16.998	118
	Average size:	0.070	0.144
December, excluding investment bank exchangeables
					2005 Comparables
	Underwriter	Amount	No.	Share	Rank	Amount	No.	Share
1	Morgan Stanley	3.896	8	31.34%	7	0.469	3	5.82%
2	Citigroup	2.129	4	17.13%	2	1.692	5	21.02%
3	Lehman	1.137	4	9.15%	6	0.532	2	6.62%
4	Merrill Lynch	1.046	6	8.41%	9	0.282	2	3.50%
5	JPMorgan	0.867	4	6.97%	1	2.231	5	27.72%
6	Deutsche Bank	0.859	3	6.91%	3	1.000	1	12.43%
7	Goldman Sachs	0.771	2	6.21%	5	0.623	2	7.73%
8	Bear Stearns	0.551	4	4.43%	11	0.113	1	1.40%
9	Banc of America	0.520	3	4.18%	4	0.660	1	8.20%
10	Wachovia	0.310	3	2.50%
	Total	12.431	19	8.048	16
	Average size:	0.654	0.503
December, including investment bank exchangeables
					2005 Comparables
	Underwriter	Amount	No.	Share	Rank	Amount	No.	Share
1	Morgan Stanley	4.074	16	30.61%	7	0.582	7	6.98%
2	Citigroup	2.490	7	18.71%	2	1.719	6	20.62%
3	Lehman	1.268	7	9.53%	6	0.589	7	7.07%
4	Merrill Lynch	1.046	6	7.86%	9	0.282	2	3.38%
5	JPMorgan	0.873	18	6.56%	1	2.231	5	26.76%
6	Deutsche Bank	0.859	3	6.45%	3	1.001	2	12.00%
7	Goldman Sachs	0.804	3	6.04%	5	0.653	4	7.84%
8	Bear Stearns	0.557	8	4.18%	11	0.113	1	1.35%
9	Banc of America	0.520	3	3.91%	4	0.660	1	7.92%
10	Wachovia	0.317	4	2.38%	13	0.022	2	0.26%
	Total	13.308	124	8.335	46
	Average size:	0.107	0.181
Prospect News Convertibles Underwriter Rankings

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.

• The investment bank exchangeables only group also includes bonds that convert into an index, a basket of stocks or a basket of indexes.

• 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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