CHICAGO — Chicago-based Loop Capital Markets LLC has cemented a partnership with UBS Wealth Management US to provide primary municipal securities to UBS’ retail clients in a move Loop is hoping will bolster its appeal with borrowers looking to capitalize on retail’s heightened prominence in the market.
“This alliance combines our strong institutional sales capabilities with one of the leading financial adviser networks in the industry. We now bring to the table for our public finance clients a retail network of 7,900 brokers,” said Loop chief executive officer Jim Reynolds.
Under the alliance, formally announced late Wednesday, Loop will provide direct access and the same treatment and pricing on transactions it senior or co-manages to UBS’ 7,900 brokers just as if the firm was also a member of the underwriting team or selling group. The arrangement is similar to one UBS struck last year with JPMorgan to expand the availability of municipal product to its retail clients.
The primary driving force in establishing both the JPMorgan and Loop relationships is to ensure that “our clients get bonds at their initial offering price,” said John Bagley, head of UBS’ municipal bond department. He said the success of the JPMorgan relationship prompted the move to work with Loop.
UBS stopped underwriting negotiated deals in June 2008 but it still maintains its own full competitive underwriting and trading in the secondary market.
“Municipal bonds are an important part of the portfolios of a substantial number of our clients. By adding Loop Capital Markets ... we are able to provide those clients with a greater range of negotiated new issue municipal bonds from which to select,” Bagley said.
The firm selected on Loop based on its strong interest in the relationship and its platform, firm leadership, solid Midwest presence, and growth.
“We chose to work with Loop Capital Markets because they fill out specific areas of client demand and they have demonstrated their commitment to continue to add to their capabilities,” Bagley said. “We decided Loop would compliment our relationship with JPMorgan.” He said additional affiliations could be established to fill a certain niche or regional demand.
Bagley declined to provide business details of how orders would work in cases where both JPMorgan and Loop are on a deal and neither firm released additional financial or legal terms of the arrangement.
Issuers are increasingly seeking to attract retail buyers to their bonds as mom-and-pop buyers, mutual funds, and money managers are growing in dominance and many market participants believe the trend will continue given the departure of some types of institutional buyers from the market.
“One of the key questions we get from municipal clients is 'how can you enhance the distribution of our securities?’ ” Reynolds said of the appeal of broadening the firm’s retail distribution channels. “We have always had some retail distribution with small institutions, money managers and trust departments, but now we can offer all that plus the mom-and-pop buyers.”
Loop last month announced hiring 10 public finance professionals as part of a larger expansion that includes new offices and hires across its divisions. The move continues Loop’s efforts to boost market share and staff and capitalize on the closing or shrinking of many large Wall Street firms.
The 12-year-old minority- and women-owned firm opened offices in Newark, N.J., and Indianapolis earlier this year and is planning to add more staff in New York City, and expand in the Southeast and California with the goal of cracking the top-10 list of senior managers.
Loop is ranked 14th this year among senior managers.
