Today's municipal bond market bears little resemblance to the market of more than 20years ago, when Bill Montrone, managing director and head of the U.S. public financegroup at Standard & Poor's Credit Market Services, began his foray into public financeas a budget analyst for the New Hampshire Senate. After a brief stint with the state,Montrone moved to the private sector and has worked there ever since.
"I'm very comfortable in public finance," Montrone said in a recent interview. "I'vebeen in it virtually my entire career."
In the last two decades, he has seen bond issuance nearly quintuple in volume, to $358billion in 2002 from $77.2 billion in 1982, the year he joined the former Dillon, Reed &Co. to pursue a career in investment banking. During his 12 years at the firm, he workedhis way up to senior vice president for project and public finance.
In 1994, Montrone joined Standard & Poor's. For about three years in the 1990s hefocused on bond insurance, working as global practice leader for bond insurance ratingsand head of strategic planning, marketing, and business development in the group. Heheld those positions before assuming his current post as head of public finance. Asoverall bond issuance has multiplied, Standard & Poor's has expanded its own handling ofpublic finance exponentially.
"[Twenty years ago] we had 40 municipal analysts in New York," Montrone said, in aconference room overlooking the financial district of lower Manhattan. "Now we have 175in five different offices in the United States." The agency now has 18 offices incities, including London, San Francisco, Chicago, Dallas, and Boston.
"Now, regardless of sector, we've got municipal experts that are actually located in theregional offices," Montrone said. "We're spending a lot of time in Florida, though wedon't actually have an office down there. It wouldn't surprise me if we opened one inthe not-too-distant future."
He had just gotten back from Maine when he was interviewed late last month. His well-timed vacation allowed him to miss the blackout that shut down many cities on theEastern Seaboard and in the Midwest on Aug. 14.
Montrone said that the bond market tends to weather about one major disaster per decade,the most potent being the terrorist attacks of Sept. 11, 2001. "I think it showed thestrength of the municipal market," he said. "We were down for a day or two, but somesales occurred in the days following 9-11."
During his career, Montrone has borne witness to the globalization of capital markets,in which corporations have gained the ability to conduct analysis across sectors andacross the world. But globalization is not, he said, the most stunning change to occurin public finance.
"The biggest thing is transparency in the market," Montrone said. "There is so muchinformation available - and available immediately - that never existed 20 years ago."
Poor disclosure practices are frequently cited as a major factor in defaults. As aresult, the financial industry has been under increasing pressure to present additionalinformation to the public.
"I don't think there's any question that the state of the art keeps improving and thebar keeps getting raised," Montrone said in reference to the growing demand forinformation. "The sheer volume of the number of analysts in the industry has increased"in order to meet the demand from clients.
In its attempt to benefit from a more educated clientele, Standard & Poor's revved upits focus on underlying ratings for insured bonds, he said, going from just a couple ofdozen ratings in the category five years ago to about 5,000 today.
Montrone holds a master's of public administration from the Maxwell School at SyracuseUniversity. He is married, has one son, and lives in Connecticut. When not working, heplays golf, rides his bike, and spends time with his family, which includes a pair ofAlaskan malamutes.
