Raymond James Financial Inc. is scaling the rankings of municipal-bond underwriters after large banks withdrew from the business.
The St. Petersburg, Florida-based company has jumped to seventh place so far this year, its highest position in at least a decade. That’s while it was on a hiring spree, adding nearly 60 people 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 other shops have scooped up talent to gain market share. Much of the hiring came when sales contracted after a period of aggressive interest rate hikes, a bet that the market would eventually rebound.
So far it has. Municipal borrowers have issued nearly $320 billion of long-term debt so far this year, a 37% increase from the same period a year ago, according to data compiled by Bloomberg.
“We believe that it is important to have bankers on the ground in the markets you want to be in,” said Gavin Murrey, the company’s head of public finance, in an interview. Raymond James has staff in half of US states.
Such investment doesn’t come risk free. Muni sales can ebb and flow — and a boom period of issuance can quickly drop the following year, leaving firms flush with bankers and little work. Fees for underwriting services have also continued to drop, making munis a less attractive business and forcing firms to consolidate or exit the market altogether.
Despite its ascent, Raymond James manages $17.6 billion of long-term debt sales for states and local governments, according to data compiled by Bloomberg. That’s less than half of what the biggest underwriter, Bank of America Corp., handles.
Still, Raymond James trails only two firms in the number of transactions managed this year. It replaced Citigroup as bookrunner on a mega deal earlier this year by Jefferson County, Alabama — a transaction that was coveted by rivals.
After Citigroup shuttered its muni division, Raymond James hired about a dozen people from the unit. Among them was Jay Wheatley, who led the bank’s national syndicate desk, as well as Ben Selberg, who now heads public power, energy and renewables at Raymond James.
Selberg brought over a major client — Main Street Natural Gas Inc. — a Georgia nonprofit that helps facilitate deals with utilities purchasing natural gas. In June, Raymond James served as senior manager on a $714 million bond deal by the nonprofit.
Susan Reeves, chief executive officer of Main Street Natural Gas, said the bank brought in new investors to the bond deal. The entity, a frequent issuer in the muni market, plans to work with Raymond James on future bond offerings, she said.
“They seem like they’ve really made a strong commitment to public finance,” Reeves said.
