Merrill Lynch
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It is hard to ignore Merrill Lynch in the CDO market – it is just so big. Its global issuance grew from $26.5 billion to $55 billion last year – a jump of 110%. But sheer size can bring its own problems and it is often hard to keep at the cutting edge of innovation while managing flows of this magnitude. However, Merrill has again spearheaded innovation in CDO structuring while maintaining its position at the top of the pile. A recent industry ranking had the firm as the number one synthetic CDO counterparty by notional volume for 2006, with a 23% market share (this reflects its strength in the senior part of the capital structure – by risk-weighted volume it falls to number five with a 9% share). It also maintained its traditional dominance of the global CDO rankings, claiming a 12.2% market share for 2006, which rises to 17.9% for the first quarter of 2007.
The CDO market has been less than rosy in the first half of 2007, and Merrill, with its 25% market share of the ABS CDO market, has found itself squarely in the centre of the action, not only as a structurer but as a warehouse lender.