For most of the high-yield debt industry, 1999 couldn't end soon enough, as new issues endured a sharp contraction in volume, tumbling by nearly one-third from a year earlier.
But for companies like Chase Manhattan Corp. and Bank of America Corp., the year may be better remembered as one that saw commercial banking companies close the gap on their Wall Street competition for the lucrative business of leading underwriting for high-yield deals.
The total volume of new issues fell 32%, to $95 billion, from $140 billion in 1998, and the number of new bond offerings from non-investment-grade companies dropped to 533, from 760.
Chase, the No. 7 issuer the previous year, had one of the strongest gains in 1999, moving into fourth place and registering a gain in volume, rare among this year's leaders. It lead managed 47 deals, worth $10.2 billion, an increase of 19% from 1998's volume of $8.6 billion.
Bank of America moved up two slots, to 10th place in the 1999 league tables, which are viewed by investment banks as one of the best indicators of a firm's strength in a particular market. It underwrote 20 issues, worth $2.9 billion, a decline of 10% from the previous year's volume of $3.3 billion but a gain in market share terms - 3.1% of new issues in 1999, compared with 2.4% in 1998.
"This year we cracked the $500 million bond level, now we're intent on leading $1 billion issues," said Michael Meyer, managing director of high-yield sales and trading at the company's investment banking unit, Banc of America Securities LLC. "That's how you get into the top five."
The Charlotte, N.C.-based company follows other commercial banks that have already broken into the pool of underwriters competing with bulge-bracket investment banks for the largest offerings. Following No. 1-ranked junk bond giant Donaldson, Lufkin & Jenrette Inc., Citigroup Inc. 's Salomon Smith Barney unit moved up one notch to second place in 1999, lead managing 62 bonds, worth $13.5 billion.
Distinguishing the top-tier underwriters from their competitors was their participation in the largest, $1 billion-plus deals. Chase, for instance, was the only bookrunner for telecommunications company Global Crossing's $2 billion offering in November.
Gains by commercial banks chipped away at market share that had been held by some of Wall Street's largest firms. Morgan Stanley Dean Witter & Co. dropped to fifth place, from second, lead managing $8.7 billion worth of new high-yield issues, or 53% less than the previous year.
Merrill Lynch & Co. also lost some ground, moving to sixth place from fourth. It was the lead underwriter on $5.7 billion worth of bonds, a 50% drop from 1998.
And these institutions were not alone in losing market share. Deutsche Bank AG, which bought Bankers Trust Corp. in last year, would have ranked fifth in 1998 on a pro forma basis. Last year, as it integrated the New York banking company, Deutsche fell to 12th.
Some of the newer entrants to the high-yield market managed to increase their standing, reflecting their movement from participating in deals as co-managers to leading the deals.
CIBC World Markets moved up two notches, to 13th place from 15th in 1998, underwriting $1.4 billion bonds, while its volume fell 30% from the previous year.
Meanwhile, First Union Corp. increased its standing to 18th from 23rd by underwriting $641 million new issues. Despite those gains, however, fees generated from First Union's core market - lower-quality, middle-market issuers - were off by 50%, noted Jay Braden, managing director in high-yield at First Union Securities.
Even so, Mr. Braden said, the banking company is aiming higher in 2000. "We were able to pick up market share," he said. "Now our objective is to get a bigger role in transactions where we're participating." 
