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The Bond Buyer
Puerto Rico Expands Underwriter Pool, Drops Bear Stearns As Co-Manager
By Michael McDonald
January 28, 2003
Puerto Rico has expanded its senior underwriting bullpen to eight companies from six, and in the process of selecting a new team for selling bonds into the U.S. tax-exempt market dropped Bear, Stearns & Co. from its co-manager group.
On Friday the Government Development Bank for Puerto Rico, the commonwealth's fiscal adviser, announced the results of the search for a new team that began late last year. It has replaced the syndicate that has been in place since mid-2001. The government and its agencies sold $6 billion in tax-exempt bonds in the U.S. market last year, all of it through negotiated sale.
The new senior team is: Goldman, Sachs & Co./First Bank, Lehman Brothers/Santander Securities Corp., Morgan Stanley/Popular Securities Inc., Banc of America/Oriental Financial Group Inc., Salomon Smith Barney Inc., UBS PaineWebber Inc., J.P. Morgan & Co./R&G Financial Corp., and Merrill Lynch & Co./BBVA SA.
J.P. Morgan and Merrill Lynch are the two new members. Only Salomon Smith Barney and UBS PaineWebber have licenses to operate in Puerto Rico and do not require a partner bank.
The new co-manager team was reduced to three members from four: Wachovia Securities/Doral Securities, Samuel Ramirez & Co., and Prudential Financial Inc./Raymond James & Associates Inc. In addition to Wachovia and Prudential, the former team included Merrill Lynch, which was promoted to senior manager, and Bear Stearns.
The new senior and co-manager teams will be in place until January 2005. In a release, GDB president Hector Mendez-Vazquez said: "For the selection, the board used as criteria the experience accumulated in the markets we traditionally tap to satisfy the needs of the government and its agencies and their capital and capability to distribute securities."
The GDB said it expects the government and government agencies to sell around $2.3 billion in debt this year, including bonds sold only to Puerto Rico residents.
The largest single tax-exempt issue out from the island last year came in October, when the Puerto Rico Children's Trust Fund sold $1.2 billion in a new money/refunding deal that securitized more of the commonwealth's tobacco settlement money. Salomon Smith Barney was the senior manager of the sale and was the commonwealth's leading senior manager, underwriting five issues last year totaling $2.3 billion.