Morgan Stanley, one of the top municipal debt underwriters in the country, is opening three new offices in strategic growth areas, while beefing up its public finance team with five new senior members plucked from top competitors.
The firm opened offices in Seattle, Dallas, and Houston, saying it was vital to have regional specialists for the muni business to grow.
“We think it is very much a localized business — we need to have bankers on the ground in these states,” said Stratford Shields, head of the public finance group in the New York headquarters office. “The need is to expand the public finance reach … and grow our negotiated client base.”
Morgan Stanley’s public finance group now maintains 10 offices around the county, including in Chicago, Orlando, Ft. Lauderdale, Denver, Austin, Los Angeles, and San Francisco.
Morgan Stanley’s market share year to date is 9.3%, according to Thomson Reuters. It has run the books on 110 issues worth $14 billion, ranking it as the fourth-largest underwriter.
The firm increased its footprint in the muni business during the financial crisis. In 2006 it senior managed only 5.0% of the market, ranking it seventh, but from 2008 onwards it has been a top-five player.
“The business objective is to increase market share to 10-12%,” said Brian Wynne, deputy head of public finance and head of municipal syndicate. “The banking franchise, coupled with distribution of the tax-exempt part of the business, will help us achieve that.”
Joining the team in New York is Steven Fernald as an executive director in the student loan group. With 10 years of experience working as a student loan banker for UBS, Fernald’s focus will be on restructuring outstanding student loan auction-rates securities and new issuance of debt backed by private student loans.
He will work alongside Barbara Thomas, head of the student loan group.
In the Houston office, Keith Richard was appointed executive director to lead the firm’s southern group to oversee business with the major Texas issuers. Richard previously worked in a similar role at Bank of America Merrill Lynch. Prior to that he worked at Lehman Brothers and Siebert Brandford Shank & Co.
Three of the firm’s latest hires went to the West Coast infrastructure group.
Morgan Stanley accounted for 11.6% of the new-issue market share among transportation-related bond sales from 2006 to present, with 31 out of 268 issues, according to Thomson Reuters.
California, Washington, and Oregon accounted for 27.3% of the total transportation-infrastructure related bond sales in 2009, of which California accounted for 72.8%.
“The state of California has the largest issuers in the municipal sector,” Shields said. “We want to make sure that we have the right people, which we think we have now.”
One new hire is Sherilyn Anderson, an executive director who will focus on Northwest issuers and transportation clients along the coast.
Anderson will be based in Seattle to work with issuers in Washington and Oregon.
Previously, Anderson spent more than three years in the wealth management group at Goldman, Sachs & Co., and prior to that she was a municipal finance banker for more than 20 years at UBS and Salomon Brothers in Seattle and New York.
Adam Aranda, coming from RBC Capital Markets, was named vice president of the West Coast infrastructure group. He will be based in San Francisco.
Nick Boyle is also joining the group as a vice president in Dallas, where he will focus on Texas school district issuers. He comes from Jefferies & Co.
School district issuers in Texas account for more than one-fifth of the state’s total issuance, according to Thomson Reuters.
Prior to working at Jefferies, Boyle spent many years at former bond insurer Financial Security Assurance, focusing on the Texas market.
The regional hires further support Morgan Stanley’s retail distribution capabilities, which got a major boost in January 2009 when the firm announced a venture with Citi, combining Morgan Stanley’s global wealth management group with Citi’s Smith Barney.
International distribution was also enhanced, as the deal included Quilter in the U.K., and Smith Barney Australia.
The entity is called Morgan Stanley Smith Barney. At the time of its formation, it held $1.7 trillion in client assets, $14.9 billion in pro-forma combined revenue, and $2.8 billion in pro-forma combined pre-tax profit, according to the company’s internal data.
