Raymond James Monetary Inc. is scaling the rankings of municipal-bond underwriters after giant banks withdrew from the enterprise.
The St. Petersburg, Florida-based firm has jumped to seventh place thus far this yr, its highest place in not less than a decade. That’s whereas it was on a hiring spree, including almost 60 individuals to its public-finance division over three years.
Following the exit of Citigroup Inc. and UBS Group AG from the muni market, Raymond James, Janney Montgomery Scott and different retailers have scooped up expertise to realize market share. A lot of the hiring got here when gross sales contracted after a interval of aggressive rate of interest hikes, a wager that the market would finally rebound.
To this point it has. Municipal debtors have issued almost $320 billion of long-term debt thus far this yr, a 37% enhance from the identical interval a yr in the past, based on information compiled by Bloomberg.
“We consider that it is very important have bankers on the bottom within the markets you need to be in,” stated Gavin Murrey, the corporate’s head of public finance, in an interview. Raymond James has workers in half of US states.
Such funding doesn’t come danger free. Muni gross sales can ebb and movement — and a growth interval of issuance can rapidly drop the next yr, leaving companies flush with bankers and little work. Charges for underwriting providers have additionally continued to drop, making munis a much less enticing enterprise and forcing companies to consolidate or exit the market altogether.
Regardless of its ascent, Raymond James manages $17.6 billion of long-term debt gross sales for states and native governments, based on information compiled by Bloomberg. That’s lower than half of what the largest underwriter, Financial institution of America Corp., handles.
Nonetheless, Raymond James trails solely two companies within the variety of transactions managed this yr. It changed Citigroup as bookrunner on a mega deal earlier this yr by Jefferson County, Alabama — a transaction that was coveted by rivals.
After Citigroup shuttered its muni division, Raymond James employed a couple of dozen individuals from the unit. Amongst them was Jay Wheatley, who led the financial institution’s nationwide syndicate desk, in addition to Ben Selberg, who now heads public energy, power and renewables at Raymond James.
Selberg introduced over a serious consumer — Important Road Pure Gasoline Inc. — a Georgia nonprofit that helps facilitate offers with utilities buying pure gasoline. In June, Raymond James served as senior supervisor on a $714 million bond deal by the nonprofit.
Susan Reeves, chief govt officer of Important Road Pure Gasoline, stated the financial institution introduced in new buyers to the bond deal. The entity, a frequent issuer within the muni market, plans to work with Raymond James on future bond choices, she stated.
“They appear like they’ve actually made a powerful dedication to public finance,” Reeves stated.