Junk Bonds JumpIndeed, this year the biggest gains have been in the junk bond market, where Wall Street firms have underwritten 181 debt offerings for a total dollar value of $49.7 billion, according to Thomson Financial. By comparison, at this time last year, the Street had pumped out 138 junk bond deals with a total value of $32.4 billion. The convertible bond market also has been active, with 103 deals coming to market for a total dollar value of $41 billion, according to Morgan Stanley's Convertbond.com tracking service. A year ago, there were 77 deals that raised $39 billion. May was a particularly active month, with 48 convertible bond deals coming to market, as companies rush to get their financing in place before the summer doldrums set in. On Wall Street, May and June traditionally are two of the busiest months for investment bankers, as companies look to get new offerings and deals done before everyone heads for the beach. "When rates are this low, it's going to drive the junk bond market," said Sean Egan, president of Egan Jones Ratings, a credit rating service.
Merrill Cashes InIn terms of banking fees, Merrill Lynch ( MER) stands in first place, taking in $392 million in fees from all bond-underwriting deals, according to Thomson. That's a big jump for Merrill, which last year stood in eighth place in fee revenue. Nipping on Merrill's heals is Citigroup ( C), which has taken in $321 million in banking fees from its bond work this year. The big loser? That's J.P. Morgan Chase ( JPM), which has seen its bond-underwriting fees tumble this year to $154 million from $329 million. But underwriting tells only one part of the bond story. That's because Wall Street firms also are cashing in on a surge in fixed-income trading revenue this year. Indeed, Bear Stearns ( BSC), Goldman Sachs ( GS) and Morgan Stanley ( MWD) all reported better-than-expected first-quarter earnings because of gains on trading bonds. (
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