Goldman Tops Lead Managers; Sales Jump 25%, To $116 Billion
Goldman, Sachs & Co. was the top senior manager of municipal bond deals in the first nine months of 1991, as new-issue volume burgeoned to $116.5 billion, 25% ahead of 1990, according to figures compiled by Securities Data Co./Bond Buyer.
Goldman managed 210 issues totaling $16.24 billion, which accounted for 14% of the total market. Its dollar volume was more than $6 billion ahead of the second-place manager, Merrill Lynch & Co., which managed $10.03 billion.
Securities Data's volume figures and rankings are based on long-term bonds with final stated maturities of 13 months or longer. Private placements, remarketings of outstanding debt, and taxable bonds issued by private nonprofit organizations are excluded.
Goldman was the leader in all four major underwriting categories for the first nine months of 1991: revenue bonds ($12.3 billion), general obligation issues ($3.95 billion), negotiated sales ($12.99 billion), and competitive financings ($3.25 billion).
The firm, which was the second-largest manager in 1990, moved into first place in the first quarter of 1991, and it has been lengthening its lead ever since. Goldman was the top senior manager in the third quarter, with 66 issues totaling $4.81 billion, more than $1 billion ahead of Merrill Lynch's $3.71 billion.
Merrill Lynch, however, led the way in co-manager rankings, in which full credit is given to each manager. Merrill participated in 747 issues totaling $34.94 billion, followed by Goldman Sachs, with 357 issues worth $34.15 billion.
Goldman's dominance comes as the municipal market enjoyed its hottest summer since 1986, with $42.56 billion sold in July, August, and September, as interest rates fell to their lowest level in more than four years. The previous third-quarter high was $59.8 billion in 1986, when the Tax Reform Act's effective date of Sept. 1 resulted in a $54.35 billion rush to market in July and August.
The market set a record for most bonds sold in the first nine months of a calendar year, easily surpassing the previous high in 1986, when $111.79 billion was sold. The new-issue pace would have to speed up enormously, however, to break 1985's $204 billion record for an entire year, as more than $108 billion of bonds came to market in the fourth quarter of that year.
All major categories of new issues posted substantial increases in 1991 from a year ago. New-money issues rose 20%, to $89.14 billion from $74.3 billion, and refundings jumped 44%, to $27.38 billion from $19.05 billion. Negotiated sales rose 22%, to $85.99 billion from $70.58 billion, and competitively bid issues jumped 34%, to $30.53 billion from $22.77 billion. Revenue bond issuance rose 19%, to $75.99 billion from $63.84 billion, and general obligation financings jumped 37%, to $40.53 billion from $29.51 billion.
Education remained the leading specific purpose for new issues in the first nine months, with a 14% increase, to $19.5 billion from $17.18 billion a year ago.
Substantial increases were also reported for health care, up 40%, to $13.54 billion from $9.67 billion; utilities, up 43%, to $11.69 billion from $8.16 billion; transportation, up 11%, to $11.69 billion from $8.81 billion, despite a 28% decline in airport bond sales; electric power, up 88%, to $6.34 billion from $3.37 billion; environmental facilities, up 43%, to $5.12 billion from $3.58 billion; and industrial development, up 32%, to $3.88 billion from $2.93 billion.
The largest increase, in terms of dollar amounts, came in the category of general-purpose, multiple-purpose, and miscellaneous issues, where new issues jumped $11.4 billion, or 43%, to $37.84 billion from $26.45 billion a year ago.
Only one sector experienced a decline from 1990's levels: housing, which fell 32%, to $8.81 billion from $13.05 billion. Part of the decline is attributable to a third-quarter flood of housing bonds in 1990, as issuers sought to sell single-family housing bonds before their tax-exempt status expired on Sept. 1.
Following Goldman and Merrill in the senior manager rankings were First Boston Corp., with $7.58 billion; Lehman Brothers, with $6.94 billion; and Smith Barney, Harris Upham & Co., with $6.93 billion.
Bear, Stearns & Co., Paine Webber Inc., and Prudential Securities Inc. each moved up one notch, to sixth, seventh, and eighth, respectively, with $5.09 billion, $4.2 billion, and $3.89 billion. Morgan Stanley & Co., which had ranked sixth in the first half, dropped to ninth with $3.75 billion.
Rounding out the top 10 firms was Bank of America, the highest-ranked commercial bank, with $2.87 billion. Bank of America had placed 16th in the first half, but shot up in the rankings in the third quarter by winning the competitive bidding for California's $1.2 billion bond sale on Aug. 13. This was the largest issue in the third quarter and the second-largest one for the year, behind a $1.26 billion California sale in February.
Following Goldman Sachs in revenue bond underwriting were Merrill Lynch, with $6.47 billion; Smith Barney, with $5.7 billion; First Boston, with $4.69 billion; and Lehman Brothers, with $4.54 billion.
Merrill Lynch was a close second in general obligation issues, with $3.57 billion, followed by First Boston, with $2.89 billion; Lehman Brothers, with $2.39 billion; and Bank of America, with $2.06 billion.
Trailing Goldman Sachs in the negotiated area were Merrill Lynch, with $7.25 billion; Smith Barney, with $6.32 billion; First Boston, with $5.67 billion; and Lehman Brothers, with $5.46 billion.
Merrill Lynch ranked second in competitive issues, as well, with $2.78 billion, followed by Bank of America with $2.62 billion; First Boston with $1.91 billion; and Prudential Securities, with $1.85 billion.
TOP MANAGERS: First Nine Months 1991
Full Credit to Lead Manager
Rank Firm Amount Issues
1 Goldman, Sachs & Co 16,242,700 210
2 Merrill Lynch Capital Markets 10,031,900 272
3 First Boston Corp 7,580,200 88
4 Lehman Brothers 6,936,500 276
5 Smith Barney, Harris Upham & Co 6,925,900 160
6 Bear, Stearns & Co 5,093,600 74
7 PaineWebber Inc 4,202,700 108
8 Prudential Securities Inc 3,893,200 218
9 Morgan Stanley & Co 3,749,300 56
10 Bank of America 2,874,800 46
11 Kidder, Peabody & Co 2,248,000 68
12 Dean Witter Reynolds Inc 2,068,100 93
13 Dillon, Read & Co 1,800,100 27
14 First Chicago Capital Markets 1,520,300 42
15 J.P. Morgan Securities Inc 1,493,000 29
Full Credit to Each Manager
Rank Firm Amount Issues
1 Merrill Lynch Capital Markets 34,938,700 747
2 Goldman, Sachs & Co 34,154,900 357
3 Smith Barney, Harris Upham & Co 28,972,800 600
4 Lehman Brothers 28,246,100 634
5 PaineWebber Inc 24,502,400 417
6 Bear, Stearns & Co 24,290,200 270
7 Dean Witter Reynolds Inc 23,100,200 446
8 Prudential Securities Inc 22,479,300 563
9 First Boston Corp 22,305,300 184
10 Morgan Stanley & Co 19,460,000 153
11 J.P. Morgan Securities Inc 13,942,000 102
12 Kidder, Peabody & Co 13,508,000 331
13 Donaldson, Lufkin & Jenrette Securities 13,146,000 207
14 Dillon, Read & Co 12,028,100 80
15 Pryor, McClendon, Counts & Co 11,479,600 93
Dollar amounts are in thousands of dollars. Short-term notes maturing in 12 months or less, private placements, and bonds sold by private nonprofit organizations are excluded. Source: Securities Data Co./Bond Buyer (9/30/91)