Citigroup, Merrill Top Wall Street Underwriters in '07

Citigroup and Merrill Lynch were the world's top underwriters of stocks and bonds in 2007, measured by volume and reported fees, despite being at the epicenter of the global credit crisis.

While Citigroup remained the top underwriter by volume for an eighth straight year, it ceded its fee crown to Merrill, according to data released on Monday by Thomson Financial.

A pullback in debt issuance industrywide caused the first drop in overall debt and equity underwriting since 2002.

Such pain may continue in 2008, as investors shy away from debt they deem unsafe, leading to further write-downs at major banks. Economists' expect that credit losses will trap an even wider array of borrowers.

"If you look at the bottom line, it was the second-best year ever. That's the good spin," said Richard Peterson, director of capital markets at Thomson Financial. "The bad spin is that Wall Street staggered across the finish line, with a lot of uncertainty and turmoil in credit markets."

Overall underwriting volume fell 4 percent to $7.51 trillion, Thomson said.

Citigroup arranged $617.6 billion of offerings, capturing in 8.2 percent share, Thomson said. JPMorgan Chase was second with $554.1 billion of offerings and a 7.4 percent share, followed by Deutsche Bank with $481.9 billion of offerings and a 6.4 percent share.

Reported fees rose 7 percent to $15.92 billion, helped by gains from lucrative equity offerings. Merrill , which ranked fourth in underwriting volume, took a 9.7 percent share, while Citigroup had 9.3 percent and JPMorgan 8.6 percent.

Bankers covet top rankings in Thomson's underwriting "league tables" for marketing purposes and bragging rights. Thomson's parent, Thomson, is in the process of buying Reuters Group.

Citigroup has projected a fourth-quarter write-down of up to $11 billion for so-called collateralized debt obligations.

Analysts have said that figure might increase.

Merrill wrote down $8.4 billion for debt in the third quarter, and analysts expect more write-offs. Both companies replaced their chief executives in the quarter.