Auction Rate Market Mess Continues

Posted by Tim Hope on 6/6/08 9:03 am

Investors who used auction rate preferred securities as an alternative to other cash equivalents are having a difficult, if not impossible, time finding liquidity.  Firms that sold the instruments are backing away from any market making activities.  Given the size of the market, the problem is considerable.  Consider that Bloomberg reports the following issuers of municipal auction rate securities for the period 2000-2007. Read more here.

1. Citigroup, $39.73 billion *
2. UBS, $31.50 billion
3. Morgan Stanley, $20.13 billion
4. Goldman Sachs, $17.80 billion
5. JP Morgan, $15.72 billion
6. Bear Stearns, $12.61 billion
7. Merrill Lynch, $12.37 billion
8. Bank of America, $11.03 billion
9. RBC Dain Rauscher, $10.25 billion
10. Lehman Brothers, $9.74 billion
*Includes Salomon Smith Barney.
Source: Bloomberg data.

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