Derivatives specialist Nat Singer, a 21-year veteran of Bear, Stearns & Co., left his old firm at the end of 2007 and joined Swap Financial Group as a partner and managing director on Thursday. Long one of the more prominent players on the dealer side of municipal swaps and derivatives, Singer will change roles at New Jersey-based Swap Financial to represent and advise state and local governments considering interest-rate swaps. In May, Bear announced that Singer would move to its asset-management side, and he soon started raising money for a new muni-related hedge fund, Singer said. When two other Bear hedge funds collapsed this summer, sending off some of the first tremors of the subprime shake-up, Bear decided not to launch Singer’s new fund. Singer decided to look around for new opportunities, and chose Swap Financial over several offers from other broker-dealers and financial advisers. “We’ve had the chance to work together for years and to get to know each other personally,” said Peter Shapiro, managing director of Swap Financial. “We found we had the kind of rapport and friendship that you would want in a small partnership like Swap Financial.” Shapiro started his muni-market career at Citi in the late 1980s, around the same time that Singer began at Bear. Having worked together on deals before, the two have known each other for a while.“We had talked about it in hypothetical terms for several years,” Shapiro said. “The question was when the timing would be right.” Singer will bring some new clients to the firm that have not worked with Swap Financial before, he said. These will be his main focus in the short term because swap advisory clients often prefer to work with the first adviser they worked with at a firm. At Bear, he spent much of his time trying to find more efficient ways for clients to do the kind of structured-type muni deals, like tobacco bond sales, that Bear would often senior manage. He was also willing to spend more time than most bankers explaining swaps to issuers, said Patrick Marsh, managing director and head of municipal structuring at Deutsche Bank Securities Inc. “He did a very good job working issuers through the process,” said Marsh, who worked with Singer at Bear from 2000 to 2005. “He did it in a professorial way with folks, where he would sit them down and just teach them A-to-Z how their swap would work.” Marsh described Swap Financial as one of the top two or three swap advisers now working in the municipal market. “They are good at pricing and conveying to issuers in a swap what is reasonable and what is not reasonable,” he said. But it is now a turbulent time for structured-finance markets more broadly. And worries over the financial strength of bond insurance companies and the broker-dealers serving as counterparties on many of the municipal markets’ swaps and derivatives could make state and local governments gun-shy over such deals in the coming year. Singer said he thinks swaps will still be viable for issuers in 2008, but that they need to make sure they understand new products before signing on to use them. “Really what they’re looking for is help in analyzing what are these different products,” Singer said. “You hear a lot of these acronyms floating around, and I don’t think there are a lot of people who understand what these products are and how they affect the different markets.” He added that it is ironic how much the market for muni structured products grew during the last few years, considering how flat the yield curve was, how narrow credit spreads were. The late-2007 shake-up could actually provide more opportunities, sources said.

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