JPMorgan still top U.S. market convertibles underwriter year to date

• U.S. market convertibles issuance totals $7.608 billion year to date

• April convertibles issuance totals $4.2 billion in 10 deals

By Rebecca Melvin

New York, April 30 - This year's U.S. convertibles new issuance still significantly lags last year's issuance levels, but the pace of new issuance continued to pick up in April, after restarting in earnest in March following a nearly five-month hiatus.

J.P. Morgan Securities Inc. was the top U.S. market convertible underwriter for the first four months of 2009, with $1.64 billion in 10 deals, accounting for 21.5% of total issuance, according to data compiled by Prospect News.

Meanwhile Goldman Sachs & Co. jumped up in the rankings to the No. 2 slot, displacing Citigroup Global Markets Inc., even as it was a late player in the game this year.

Goldman's first deal of the year came only on March 30. But the bookrunner made up for lost time by pricing $902 million in four deals in April, making it the No. 1 underwriter for April, with a 21.5% share of the market.

For April, JPMorgan ranked No. 2 with $853 million in five new deals, representing 20.3% of the market. Morgan Stanley & Co. Inc. followed up in third place, with $458 million, in three deals, totaling 10.9% of the market.

In April, the top underwriters' individual deal volumes finally broke the threshold into the billions of dollars, a significant change from 2008, when volumes were well into the billions of dollars for all of the first half of the year.

Total new issuance for the first four months of 2009 stands at $7.60 billion, which is up from $2.91 billion for the first three months of the year but is still lagging the $31.82 billion of new issuance that came to market in the first four months of 2008.

April's $4.2 billion of new issuance compared to $2.11 billion in new issuance in March.

But there was zero new issuance for February 2009, as markets were still suffering the effects of the credit freeze that set in last autumn after Lehman Brothers Holdings Inc. failed.

New issuance in the last 30 days has been sprinkled over a variety of sectors. There was one deal by a financial, Old Republic International Corp.'s $316.25 million brought via Merrill Lynch and JPMorgan. But other than the Chicago-based insurer, new issuance has been devoid of financial services paper. There were, however, a few real estate investment trusts, which have a financial element, which came to market.

Those deals included Alexandria Real Estate Equities Inc., a Pasadena, Calif.-based REIT involved in the life sciences industry niche, and Digital Realty Trust LP, a San Francisco-based REIT involved in technology-related real estate.

Many of April's deals have been smaller, in the $200 million to $300 million range, such as Micron Technology Inc.'s $230 million of five-year convertibles brought by Morgan Stanley and Goldman Sachs.

April's largest deal came from United States Steep Corp. which priced a vastly upsized offering to $750 million of convertibles. Boca Raton, Fla.-based wireless infrastructure company SBA Communications Corp. brought the second-largest deal in the United States in April, with a $500 million deal, sold via Citigroup, Barclays Capital, Deutsche Bank Securities Inc., JPMorgan and Wachovia.

April also brought revivals of the convertibles markets in Europe, Asia and Africa. Of note, Anglo America plc came to market with a Regulation S, $170 million convertible deal via Goldman Sachs and Morgan Stanley in Europe; Power Regal Group Ltd. (Beijing Enterprises Holdings Ltd.) came to market with HK$1.78 billion via Nomura and Credit Suisse in Asia; and Aquarius Platinum Ltd. brought a ZAR 650 million deal via Rand Merchant Bank in Africa.

In general, coupons on new issuance were in the 4% to 6% range in April, but they also got higher to the 7% to 8% level. Premiums fell mostly into the range of 20% to 30%.

Year to date

2008 Comparables

	Underwriter	Amount	No.	Share	Rank	Amount	No.	Share
1	JPMorgan	1.635	10	21.49%	6	2.075	14	6.52%
2	Goldman Sachs	1.097	6	14.41%	3	4.255	7	13.38%
3	Citigroup	0.969	8	12.74%	4	4.009	9	12.60%
4	Merrill Lynch	0.912	8	11.98%	9	1.130	9	3.55%
5	Morgan Stanley	0.873	5	11.48%	10	0.946	7	2.97%
6	Deutsche Bank	0.737	6	9.69%	7	1.665	8	5.23%
7	Credit Suisse	0.517	4	6.79%	11	0.803	6	2.52%
8	SG	0.267	1	3.50%
8	Calyon	0.267	1	3.50%
10	Barclays	0.201	2	2.64%
	Total	7.608	23	31.815	51
	Average size:	0.331	0.624
April
					2008 Comparables
	Underwriter	Amount	No.	Share	Rank	Amount	No.	Share
1	Goldman Sachs	0.902	4	21.46%	2	2.513	2	19.82%
2	JPMorgan	0.853	5	20.31%	5	0.822	4	6.49%
3	Morgan Stanley	0.458	3	10.91%	6	0.636	4	5.02%
4	Merrill Lynch	0.394	4	9.36%	10	0.075	1	0.59%
5	Deutsche Bank	0.360	4	8.57%	4	0.955	3	7.53%
6	Citigroup	0.335	4	7.97%	8	0.287	2	2.27%
7	SG	0.267	1	6.35%
7	Calyon	0.267	1	6.35%
9	Credit Suisse	0.167	2	3.97%
10	Banc of America	0.142	2	3.37%	7	0.407	2	3.21%
	Total	4.201	10	12.676	14
	Average size:	0.420	0.905
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.

• 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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