Markets

CHICAGO — St. Petersburg, Fla.-based Raymond James & Associates is hoping to carve out a bigger chunk of senior-manager business in the Midwest with two new public finance hires in Chicago, one to bolster the firm's local government team here and the other to focus on large governmental issuers.

Kroll Bond Ratings got one step closer to rating muni credits last week by announcing its first big public finance hire. The next step is to release a comprehensive default study to show the market it can be a serious rival to the three dominant rating agencies.

The municipal market can expect to see a surge of municipal issuance this week, with $5.28 billion coming to market, up from last week’s revised $2.55 billion.

The Bond Buyer's weekly indexes indicate that tax-exempts outperformed the Treasury market this week — a trend that almost never happens when the two markets are rallying.

Higher borrowing costs for state and local governments as a result of the sovereign downgrade? Hardly. Or at least: not yet.

When Moody's Investors Service warned of a possible downgrade to the United States' sovereign credit last month, it said hundreds of triple-A muni credits ¯ including five of the 15 states it rates Aaa ¯ could likely follow.

Calm, yet cautious. Skeptical and apprehensive. Unfazed. Those are the mixed emotions that both retail and institutional investors have amid all the speculation and uncertainty swirling through the municipal market following last week's unprecedented downgrade of the U.S. by Standard & Poor's.

Nobody knows exactly what the long-term impact of the United States losing its AAA rating from Standard & Poor's means for municipal bonds, but that didn’t stop the experts from speculating.

Moody’s Investors Service called the second-quarter a "critical test" for liquidity facilities supporting the variable-rate demand market. So kudos all around, for the market passed with "near-universal success."

Even with municipal bond yields across the curve dropping to 2011 lows last week, borrowers are still not jumping at the opportunity to come to market.