Securities Underwriting Fees Plunge $1.2 Billion in 1990 : Wall Street: The decline indicates how sharply the issuance of new stocks and corporate bonds have fallen during the year.

Securities underwriting fees fell a breathtaking $1.2 billion, or about one-third, in 1990, in another sign of just how bruising a year it has been for Wall Street.

Preliminary statistics released Friday by Securities Data Co. showed the fees declined to $1.9 billion this year from $3.1 billion in 1989. Such fees represent 4% or less of the securities industry’s total revenue, but more than 50% of the profit of some Wall Street firms.

The falloff reflects the way the issuance of new stocks and corporate bonds has withered because of the economic slowdown, the sharp decline of the high-risk junk bond market and the heavily leveraged state of corporate America’s balance sheets.

Other factors were the precipitous decline in merger activity and the general skittishness of business toward financings since Iraq’s invasion of Kuwait in August raised the prospect of war.

“If you assume the recession will last through the first half of the year, as I do, then next year it’s highly likely these numbers will be even lower,” said Perrin Long, who tracks Wall Street firms for Lipper Analytical Securities.

The slowdown hit hardest in common stocks, which offer the highest profits to Wall Street firms. Total new issues volume was valued at $19.2 billion, the lowest level in six years and 56.7% lower than the peak that was reached in 1986.

Corporate bond issues fell to their lowest level in five years. Only $105.6 billion was raised in 1990, a 21.2% decline from the $134.1 billion raised in 1989.

The only bright spot was the market for mortgage and asset-backed securities, where total volume hit $176.7 billion, surpassing last year’s record, and accounting for 56% of all money raised by U.S. securities issuances.

The decline in underwritings represents only one aspect of Wall Street’s bleak financial picture.

The securities industry has laid off 50,000 people from its peak employment of 261,000 in 1987, and Long predicted that another 6,000 to 8,000 jobs--another 3% to 4%--may be cut this year. Much of those cuts may come in the first quarter, he said, the period when Wall Street firms traditionally trim their payrolls.

For the first nine months of the year, the securities industry was running a $22-million loss, compared to a profit of $1.2 billion for all of 1989.

In addition to the slowdown in underwriting fees, Wall Street has been suffering from a drying up of commission revenue as the stock market has slumped, and from a withering of the highly profitable mergers and acquisitions business.

Securities Data reported this week that U.S. merger volume was off 47% this year from the 1989 level, to 4,486 deals. Meanwhile, the volume of leveraged buyouts--one of the 1980s most lucrative financial fads--tripped 75%, to 187 deals worth $20.9 billion.

By comparison, the biggest single LBO deal to close during 1989 had a larger value--the $30-billion buyout of RJR Nabisco. The largest U.S. merger announced in 1990 was the $7.4-billion acquisition of MCA by Matsushita Electric Industrial Co.