Barclays Capital announced the addition of two senior members to its public finance health care unit Monday as it continues to grow the one-time Lehman Brothers team.
Additionally, the bank picked up four other industry professionals from leading underwriters, according to people knowledgeable about the matter.
Barclays entered the municipal market in September 2008 when it acquired Lehman’s 160-person muni bond team as part of its purchase of the now-defunct firm’s broker-dealer assets.
The team — led by 25-year industry veteran Rob Taylor — has consistently been one of the top underwriters in the country. Taylor was promoted in February after 16 years with the unit, which ranks sixth in the nation so far this year.
It has been the book-runner for 81 deals worth $11.37 billion, reflecting a 6% market share, according to Thomson Reuters. Barclays has senior managed four health care issues so far this calendar year worth $303.8 million.
That volume ranks 12th nationally, versus seven deals totaling $716.7 million in all of 2009, when the team was ninth.
According to Fitch Ratings, the health care sector is currently under pressure from “strategic, operational, financial, and environmental factors.”
Those challenges include cost inflation and volume losses, regulatory uncertainty, and negative rating pressure.
With two new senior faces, Barclays hopes to meet those challenges and put its health care unit on par with the rest of the firm.
“Barclays Capital has been steadily hiring in the public health care sector,” Taylor said. “It is a critical growth area for the firm’s public finance business.”
Steven Hollis joined Barclays two weeks ago as a director of public health care in San Francisco. Hollis has worked in health care finance since the early 1980s and was most recently at Goldman, Sachs & Co, where he was a vice president of municipal finance.
He worked at Banc of America Securities and Cain Brothers & Co., a boutique investment firm that works exclusively in the medical services industry, prior to Goldman Sachs.
Hollis is joined by Damon Lee, who came to Barclays in May as a director of public health care in New York. Lee is a 13-year veteran of Bank of America Merrill Lynch, where he helped launch its first municipal products group outside the U.S., in London, in May 2007.
Lee served as a vice president of Merrill’s municipal markets group in New York for almost eight years prior to the London job.
As a senior marketer and investment banker, Lee developed a specialty in financing health care systems and universities.
He was also a financial analyst of muni derivatives in Merrill’s New York office from 1997 to 1999.
In addition to Hollis and Lee, sources said Barclays has selected a third health care director: Jay Sterns. Barclays wouldn’t comment about his addition to its Chicago office.
Sterns was previously in the health care group at Goldman.
Sources said two additional directors and one vice president have also joined the firm and will commence work in the coming weeks.
In the public power sector, Hiran Cantu joins the New York office as a director. Cantu was previously at bond insurer MBIA Inc., and served as a public power credit analyst at Fitch earlier in his career.
Bernie Costello, previously a municipal trader at Citi, will join the firm as a director specializing in taxable Build America Bonds.
Barclays is the fourth-largest underwriter of BABs this year. It has been book-runner on 17 issues totaling $5.01 billion, a 10.8% share of the market.
According to Peter DeGroot, managing director of municipal strategy at Barclays, BABs have been particularly attractive recently because taxable municipal spreads “have been less volatile than their corporate counterparts.”
For instance, over the last three months the standard deviation of the option-adjusted spread in Barclays’ Taxable Municipal Index was 12.3 basis points, versus 19.6 basis points for the bank’s Credit Index and 19.1 basis points for Long Credit Index, he said.
“Although the market's performance has been directionally similar, muted price volatility has persisted in taxable municipals, despite uncertainty about the U.S. recovery, concern about longer-dated liabilities and a rash of negative headlines,” he said.
Finally, sources said Salvador Torres will join the New York office as a vice president for the western region.
Torres previously served in a similar role with Morgan Stanley for nearly three years.
He was a vice president with Loop Capital Markets from June 2003 to July 2006 after serving three years as a consultant for the financial advisory firm Public Financial Management.
