Citigroup Inc held on to its crown as Wall Street's top underwriter in the first quarter, a more lucrative period for the securities industry.
Amid strong demand for fixed-income securities, world-wide stock and bond underwriting totalled $1.86 trillion, up 9 percent from a year earlier, Thomson Financial data released on Friday show. Reported fees jumped 20 percent to $3.8 billion.
Bankers said investors have grown more comfortable with risks that are unlikely to go away, including higher interest rates, volatile energy prices, a growing US trade deficit, the Iraq war and bird flu.
"Markets, both debt and equity, are extremely liquid right now, affording significant flexibility to issuers and investors in size, structure and risk," said Tyler Dickson, Citigroup's head of global equity capital markets.
Citigroup handled $178.8 billion of transactions during the quarter, for a 9.6 percent market share. J.P. Morgan Chase & Co had $130.3 billion of transactions to rank second, up from fourth a year earlier. Morgan Stanley fell to third from second, with $120.7 billion.
In fees, Citigroup reported $386 million, for a 10.2 percent share, edging Goldman Sachs Group Inc, which had $378.1 million. Morgan Stanley was third, followed by two Japanese firms, Daiwa Securities and Nomura.
Wall Street banks use Thomson's underwriting "league tables" in marketing and as a source of pride.
US debt sales rose 10 percent to $962.1 billion, including a 36 percent surge from investment-grade US companies.
Fuelling this was multi-billion dollar offerings to fund acquisitions by such companies as Cisco Systems Inc, Oracle Corp and a utility unit of Warren Buffett's Berkshire Hathaway Inc.
Rising interest rates spurred demand for floating-rate debt though yields on longer-term fixed-rate securities stayed low.
"Issuers would like to (sell long-term) debt because the cost remains low," said Jim Merli, global head of fixed-income syndicate at Lehman Brothers Inc, which sold $2 billion of floaters on Wednesday. "Investors prefer shorter-dated product for the same reason."
Junk bond issuance fell as many issuers looked to a highly liquid leveraged loan market, especially as private equity funds step up mergers and acquisitions.
Initial public offerings cooled, with Mexico's Grupo Aeroportuario del Pacifico raising $1 billion in the biggest. Canada's Tim Hortons Inc said it raised $772 million. But bankers see some $17 billion of US IPOs in the pipeline, including a $2.45 billion MasterCard Inc offering.
"Substantial activity will take place in the second quarter and beyond," said Mark Hantho, global head of equity capital markets at Banc of America.
A healthy merger environment, led by AT&T Inc's 67 billion take-over of BellSouth Corp, is encouraging some companies to look for suitors rather than go public.
Matt Johnson, Lehman's global head of equity syndicate, said companies have large cash stakes for mergers and growth.